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Reclassification to Avoid Consumer Cost-Sharing in Group Health Plans

Author

Listed:
  • Olesya Fomenko
  • Jonathan Gruber
Abstract
We examine how consumers respond to being effectively double insured under two systems: group health (GH) and workers’ compensation (WC). Many GH plans have substantial consumer cost-sharing burden, while WC coverage has no cost-sharing for medical services for work-related injuries. As a result, a consumer facing a large deductible under their group health plan will have a strong financial incentive to make a claim under WC instead. We use a unique data set of claims under both GH and WC to study how “case shifting” to WC responds to GH deductibles for the most common set of injuries that are covered under both types of insurance. We identify the impact of case shifting by using interactions of deductible levels and previous spending. We find that a typical claim is about 1.4 percentage points (5.3%) more likely to be filed as a WC claim when facing an average deductible (about $630) compared to a plan with no deductible, and that total WC costs in the U.S. are more than $1.2 billion higher as a result. At the same time, we find that consumers do not appear to be forward looking, focusing on the “spot price” rather than the full “end of year price” in deciding whether to claim under WC.

Suggested Citation

  • Olesya Fomenko & Jonathan Gruber, 2019. "Reclassification to Avoid Consumer Cost-Sharing in Group Health Plans," NBER Working Papers 25870, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:25870
    Note: AG EH LS PE
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    References listed on IDEAS

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    4. Zarek C. Brot-Goldberg & Amitabh Chandra & Benjamin R. Handel & Jonathan T. Kolstad, 2017. "What does a Deductible Do? The Impact of Cost-Sharing on Health Care Prices, Quantities, and Spending Dynamics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(3), pages 1261-1318.
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    Cited by:

    1. Marika Cabral & Marcus Dillender, 2024. "The Impact of Benefit Generosity on Workers' Compensation Claims: Evidence and Implications," American Economic Journal: Applied Economics, American Economic Association, vol. 16(3), pages 436-481, July.

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    More about this item

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy

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