A Comparison of Cost-Sharing Versus Free Care in Children

Effects on the Demand for Office-Based Medical Care

Published In: Medical Care, v. 29, no. 9, Sep. 1991, p. 890-898

Posted on RAND.org on December 31, 1990

by Geoffrey M. Anderson, Robert H. Brook, Albert P. Williams

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Using data from the community based RAND Health Insurance Experiment, the effect of cost-sharing versus free care on the use of office-based medical care in children was examined. Children from families on cost-sharing plans had a 22 percent lower probability (P less than 0.005) of having an episode of care during the study year. Both the number of episodes of care and total charges for outpatient professional services were 30 percent lower (P less than 0.005) with cost-sharing. cost-sharing reduced average charges for medical services by 30 percent (P less than 0.01) and pathology charges by 45 percent (P less than 0.005). cost-sharing reduced medical services received by 26 percent (P less than 0.05) and pathology services received by 43 percent (P less than 0.05) but did not have a significant effect on either the price for medical services or pathology services. It was concluded that there is a large difference between cost-sharing insurance plans and free care in the demand for office-based medical care in children. Cost-sharing results in children receiving fewer services, not lower priced services.

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