November 30, 2018

The effect of reinsuring a deductible on pharmaceutical spending: A Dutch case study on low-income people

The basic health insurance in the Netherlands includes a mandatory deductible of currently 385 euros per adult per year. Several municipalities offer a group contract for low-income people in which the deductible is reinsured, meaning that out-of-pocket spending under the deductible is covered by supplementary insurance. This study examines to what extent such reinsurance leads to higher pharmaceutical spending. We use a unique dataset from a Dutch health insurer with anonymized individual insurance claims for the period 2014-2017. We run a difference-in-difference regression to estimate the effect of reinsurance on pharmaceutical spending. The treatment group consists of enrollees from three municipalities that implemented reinsurance on January 1st 2017. The control group includes enrollees from three municipalities that didn’t implement reinsurance.
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We find that the introduction of reinsurance led to a statistically significant increase in pharmaceutical spending of 16% in the first quarter of 2017 and 7% in the second quarter. For the second half of 2017 the effect is small and not statistically significant. Conditional on people with low expected spending we find a statistically significant increase in pharmaceutical spending in all four quarters of 2017 varying from 22% to 30% per quarter. 


Richard van Kleef (EUR)
Onno van der Galiën (Achmea)

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