Journal of Economic Perspectives: Vol. 25 No. 2 (Spring 2011)


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Patient Cost-Sharing and Healthcare Spending Growth

Article Citation

Baicker, Katherine, and Dana Goldman. 2011. "Patient Cost-Sharing and Healthcare Spending Growth." Journal of Economic Perspectives, 25(2): 47-68.

DOI: 10.1257/jep.25.2.47


In this paper, we explore the role patient incentives play in slowing healthcare spending growth. Evidence suggests that while patients do indeed respond to financial incentives, cost-sharing does not uniformly improve value; rather, cost-sharing provisions must be deliberately structured and targeted to reduce care of low marginal value. Other mechanisms may be helpful in targeting particular populations or types of utilization. The spillover effects between privately insured and publicly insured populations as well as market imperfections suggest a potential role for public policy in promoting insurance design that slows spending growth while increasing the health that each dollar buys.

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Baicker, Katherine (Harvard U)
Goldman, Dana (U Southern CA and RAND Corporation, Santa Monica, CA)

JEL Classifications

G22: Insurance; Insurance Companies
H51: National Government Expenditures and Health
I11: Analysis of Health Care Markets
I18: Health: Government Policy; Regulation; Public Health


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