American Economic Review: Insights
ISSN 2640-205X (Print) | ISSN 2640-2068 (Online)
Dynamics of Consumer Responses to Medical Price Changes
American Economic Review: Insights
(pp. 534–49)
Abstract
How individuals respond to coinsurance rates is fundamental for insurance market design, but most existing estimates speak only to short-run responses. We exploit a unique policy experiment that increased the coinsurance rate some elderly individuals face when they are aged 70–74 but not before or after. Higher coinsurance rates have an immediate and persistent effect on health care expenditure, and a sizable share of this effect persists after age 75. We find no evidence that higher coinsurance rates affect health. These results suggest that health care utilization depends on dynamic factors other than health stock, such as habits.Citation
Komura, Norihiro, and Shun-Ichiro Bessho. 2025. "Dynamics of Consumer Responses to Medical Price Changes." American Economic Review: Insights 7 (4): 534–49. DOI: 10.1257/aeri.20240228Additional Materials
JEL Classification
- C93 Field Experiments
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- L62 Automobiles; Other Transportation Equipment; Related Parts and Equipment
- L94 Electric Utilities
- Q42 Alternative Energy Sources