Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/198586
Authors: 
Devereux, Kevin
Abadi, Mona Balesh
Omran, Farah
Year of Publication: 
2019
Series/Report no.: 
UCD Centre for Economic Research Working Paper Series No. WP19/10
Abstract: 
The long run price elasticity of healthcare spending is critically important to estimating the cost of provision. However, temporary randomized controlled trials may be confounded by transitory effects. This paper shows evidence of a "deadline effect" - a spike in spending in the final year of the program - among participants of the RAND Health Insurance Experiment, long considered the definitive RCT in the field. The deadline effect is economically and statistically significant, with power to identify coming from random allocation to three- or five-year enrollment terms. The deadline effect interacts with the price elasticity: participants who face lower coinsurance rates show larger spending spikes. Crucially, controlling for the price-deadline interaction yields significantly smaller estimates of the price elasticity in non-deadline years, which we argue is a better approximation for the long run elasticity. This has important implications for public finance and the design of private/temporary subsidy programs.
Subjects: 
Health insurance
moral hazard
public health
RCTs
JEL: 
C93
D91
H31
H42
H51
I12
I13
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.