Do Optional Deductibles Reduce the Number of Doctor Visits? – Empirical Evidence with German Data

Deductibles in health insurance are often regarded as a means to contain health care costs when individuals exhibit moral hazard. However, in the absence of moral hazard, voluntarily chosen deductibles may instead lead to self-selection into different insurance contracts.We use a set of new variables in the German Socioeconomic Panel for the years 2002, 2004, and 2006 that measure individual health more accurately and include risk-attitudes towards health in order to determine the price elasticity of demand for health care.A latent class approach that takes into account the panel structure of the data reveals that the effect of deductibles on the number of doctor visits is negligible. Private add-on insurance increases the number of doctor visits.However, altogether the effects of the insurance state on the demand for doctor visits are small in magnitude.