The Effect of Cost Sharing on the Use of Medical Services by Children

Interim Results from a Randomized Controlled Trial

Published in: Pediatrics, v. 75, no. 5, May 1985, p. 942-951

Posted on RAND.org on December 31, 1984

by Arleen Leibowitz, Willard G. Manning, Emmett B. Keeler, Naihua Duan, Kathleen N. Lohr, Joseph P. Newhouse

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Health care expenditures of 1,136 children whose families participated in a randomized trial, The Rand Health Insurance Experiment, are reported. Children whose families were assigned to receive 100% reimbursement for health costs spent one third more per capita than children whose families paid 95% of medical expenses up to a family maximum. Outpatient use decreased as cost-sharing rose for a variety of use measures: the probability of seeing a doctor, annual expenditures, number of visits per year, and numbers of outpatient treatment episodes. Hospital expenditures did not vary significantly among children insured with varying levels of cost-sharing. Episodes of treatment for preventive care were as responsive to cost-sharing as episodes for acute or chronic illness. The results give no reason not to insure preventive care as liberally as care for acute illness.

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