Top-Up Design and Health Care Expenditure: Evidence from Cardiac Stents

43 Pages Posted: 12 Mar 2020 Last revised: 6 Nov 2020

See all articles by Ginger Zhe Jin

Ginger Zhe Jin

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

Hsien‐Ming Lien

National Chengchi University (NCCU)

Xuezhen Tao

Shanghai University of Finance and Economics - College of Business

Multiple version iconThere are 2 versions of this paper

Date Written: November 5, 2020

Abstract

Since 2006, Taiwan's National Health Insurance (NHI) covers the full cost of baseline treatment in cardiac stents (bare-metal stents, BMS), but requires patients to pay the incremental cost of more expensive treatments (drug-eluting stents, DES). Within this "top-up" design, we study how hospitals respond to a 26% cut of the NHI reimbursement rate in 2009. We find hospitals do not raise the DES prices from patients, but increase BMS usage per admission by 18%, recouping up to 30% of the revenue loss in 2009-2010. Overall, the rate cut is effective in reducing NHI expenditure despite hospitals' moral hazard adjustment.

Keywords: top-up design, health care cost, cardiac stent, moral hazard

JEL Classification: G22, I11, I18

Suggested Citation

Jin, Ginger Zhe and Lien, Hsienming and Tao, Xuezhen, Top-Up Design and Health Care Expenditure: Evidence from Cardiac Stents (November 5, 2020). Available at SSRN: https://ssrn.com/abstract=3540968 or http://dx.doi.org/10.2139/ssrn.3540968

Ginger Zhe Jin

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3484 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Hsienming Lien

National Chengchi University (NCCU) ( email )

No. 64, Chih-Nan Road
Section 2
Wenshan, Taipei, 11623
Taiwan

Xuezhen Tao (Contact Author)

Shanghai University of Finance and Economics - College of Business ( email )

777 Guoding Road
Shanghai, 200433
China

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