further reduced per capita expenditures for care.14 Moreover, at lower levels of cost-sharing, the
elasticity of demand for care was lower. Among people with a coinsurance rate less than 25
percent, the estimated out-of-pocket price elasticity was –0.17, compared with –0.22 among
people with a coinsurance rate between 25 and 95 percent. In contrast, differences in out-of-
pocket maximums did not significantly affect demand.
More recent studies on the responsiveness of health expenditures to cost sharing have relied
on insurance claims data to estimate demand, in contrast to the random-assignment experimental
method of the HIE. For example, Eichner (1998) used 1990-1992 insurance claims data from a
single large employer to estimate consumers’ response to the effective reduction in the price of
care that occurs as plan participants reach their deductible. Eichner estimated a price elasticity of
expenditures between -0.62 and –0.75, larger than most other estimates of this type.15
Analyses of the HIE found that lower-income consumers were more responsive to cost
sharing than those with higher incomes. Participants with income in the lowest third of the
sample and enrolled in the free plan were 34 percent more likely to use health services of any
kind than low-income participants in plans with cost-sharing. Among those with incomes in the
top third, this difference was only 22 percent (Manning et al. 1987).
More recent analyses of income-related differences in utilization have relied on observation
population subgroups eligible for Medicaid and SCHIP—largely women and children—the
14 A $3,200 family deductible (in 2004 dollars) with no additional cost sharing would reduce average medical expenditures by 31 percent, relative to a plan with free care (Morrissey 2005).
15 As another example, using insurance data from the early 1990sto look at the effects of alternative deductibles among middle- to upper-income individuals in the Netherlands, Van Vliet (2004) estimated an overall deductible elasticity of –0.14. In this study, once the deductible was satisfied there was little or no out-of-pocket payment for services.