Cover: The Impact of Cost Sharing on Emergency Department Use

The Impact of Cost Sharing on Emergency Department Use

Published 1985

by Kevin F. O'Grady, Willard G. Manning, Joseph P. Newhouse, Robert H. Brook

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The authors of this Note studied the effect of insurance coverage on the use of emergency department services, using data from a national trial of cost sharing in health insurance. A total of 3973 persons below the age of 62 years were randomly assigned to fee-for-service health insurance plans with coinsurance rates of 0, 25, 50, or 95 percent, subject to an income-related upper limit on out-of-pocket expenses. Persons with no cost sharing had emergency department expenses that were 42 percent higher than those for persons on the 95 percent plan (p < 0.01) and about 16 percent higher than those for persons with smaller amounts of cost sharing. Without cost sharing, emergency department visits for less serious diagnoses (e.g. abrasions) increased three times as much as did visits for more serious diagnoses (e.g. lacerations). Controlling for insurance, persons in the lower third of the income distribution had emergency department expenses that were 64 percent higher than those in the upper third (p < 0.001) and received a greater proportion of their ambulatory care in the emergency department. It was concluded that the absence of cost sharing results in significantly greater emergency department use than does insurance with cost sharing. A disproportionate amount of the increased use involves less serious conditions.

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