All in a Deductible’s Work: Cost-Sharing, Chronic Conditions, and Health (Job Market Paper): (link)

This paper measures the health effects of a large, exogenous increase in the plan deductible on patients with diabetes and high cholesterol. I find that an on average if-random increase in the individual deductible of $1,000 does not affect the health of the average patient with these conditions. However, when I divide patients on the basis of their underlying disease severity, I find that the deductible increase worsens the health of patients that were initially in control of their condition. Among diabetics with initial glycemic control, the deductible change causes a 2.3 percentage point, or a 19% increase relative to the mean in the probability of having a high HbA1c value (> 7.5%). Among patients with stable baseline cholesterol, the deductible change causes a 0.5 percentage point, or 12.5%, increase relative to the mean in the probability of having a high cholesterol value (> 160 mg/dl). I investigate the mechanisms that drive these results and find that it is driven by the differential impact of the deductible increase on primary care use, and in short-term reductions of high value prescription drugs. These results have implications for optimal plan design and programs that target chronic disease management.