PUBLIC HEALTH INSURANCE AND HEALTH CARE DEMAND: A BEHAVIORAL MICROSIMULATION MODEL

Microsimulation has often been used to estimate the impacts of health care reimbursement reforms, but usually in a static framework without taking into account behavioral changes of patients. Geoffard and de Lagasnerie [2013] have followed this particular methodology for examining the impact of the introduction of a deductible, a unique co-payment and an out-of-pocket ceiling. This paper extends this work by introducing behavioral responses based on the findings of empirical studies measuring the price elasticity of health care demand. By integrating behavioral responses into the microsimulation model, this study shows that up to a deductible equal to about 100 euros with price elasticity of health care demand set at - 0.2, the incentive effects of the deductible and co-payment are higher than the positive impact on health care consumption of the ceiling. It is then possible to reduce the ceiling with the surplus generated for the public health insurance. By reducing the ceiling, the equity of the reform is increased. Fora deductible higher than 100 euros, the positive impact of the ceiling overruns the incentive impact of the deductible and in that case it is necessary to raise the ceiling to keep the same level of public health insurance's spending.