Heterogeneous Effects of a Nonlinear Price Schedule for Outpatient Care

28 Pages Posted: 6 Dec 2013

See all articles by Helmut Farbmacher

Helmut Farbmacher

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA)

Peter Ihle

University of Cologne - University Hospital of Cologne

Ingrid Schubert

University of Cologne - University Hospital of Cologne

Joachim K. Winter

Ludwig Maximilian University of Munich (LMU); CESifo (Center for Economic Studies and Ifo Institute); Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA); Deutsche Bundesbank - Research Department

Amelie C. Wuppermann

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics

Date Written: November 29, 2013

Abstract

Theoretical considerations suggest that nonlinear health care price schedules have heterogeneous effects on health care demand. In this paper, we develop and apply a finite mixture bivariate probit model to analyze whether there are heterogeneous reactions to the introduction of a nonlinear price schedule in the German statutory health insurance system. In administrative insurance claims data from the largest German health insurance plan, we find that some individuals strongly react to the new price schedule while a second group of individuals does not react. Post-estimation analyses reveal that the group of the individuals who do not react to the reform includes the relatively sick. These results are in line with forward-looking behavior: Individuals who are already sick expect that they will hit the kink in the price schedule and thus are less sensitive to the co-payment.

Keywords: finite mixture models, bivariate probit, demand for health care, nonlinear price schedule

JEL Classification: C350, I110, I180

Suggested Citation

Farbmacher, Helmut and Ihle, Peter and Schubert, Ingrid and Winter, Joachim K. and Wuppermann, Amelie C., Heterogeneous Effects of a Nonlinear Price Schedule for Outpatient Care (November 29, 2013). CESifo Working Paper Series No. 4499, Available at SSRN: https://ssrn.com/abstract=2363920 or http://dx.doi.org/10.2139/ssrn.2363920

Helmut Farbmacher

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA) ( email )

Amalienstrasse 33
Munich, 80799
Germany

Peter Ihle

University of Cologne - University Hospital of Cologne ( email )

Building 47, 9th floor Kerpener Str.
Herderstrasse 52
Cologne, 50931
Germany

Ingrid Schubert

University of Cologne - University Hospital of Cologne ( email )

Building 47, 9th floor Kerpener Str.
Herderstrasse 52
Cologne, 50931
Germany

Joachim K. Winter

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Max Planck Society for the Advancement of the Sciences - Munich Center for the Economics of Aging (MEA) ( email )

Amalienstrasse 33
Munich, 80799
Germany

Deutsche Bundesbank - Research Department ( email )

PO Box 10 06 02
D60006 Frankfurt
Germany

Amelie C. Wuppermann (Contact Author)

Ludwig Maximilian University of Munich (LMU) - Faculty of Economics ( email )

Ludwigstrasse 28
Munich, D-80539
Germany

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