A COMPARISON OF COST-SHARING VERSUS FREE CARE IN CHILDREN - EFFECTS ON THE DEMAND FOR OFFICE-BASED MEDICAL-CARE

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 < 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 < 0.005) with cost-sharing. cost-sharing reduced average charges for medical services by 30 percent (P < 0.01) and pathology charges by 45 percent (P < 0.005). cost-sharing reduced medical services received by 26 percent (P < 0.05) and pathology services received by 43 percent (P < 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.