Table 4.
Sensitivity of Elasticity Estimates to Choice of Plan Comparisons and Price Measures
| Panel A: Arc Elasticities of Total Spending w.r.t Coinsurance Rate, for Different Plan Pairsa | |||||
|---|---|---|---|---|---|
| 25% Coins | Mixed CoinsC | 50% Coins | Individual DeductibleC | 95% Coins | |
| Free Care | −0.180 (0.044) | −0.091 (0.051) | −0.149 (0.080) | −0.119 (0.031) | −0.234 (0.039) |
| 25% Coins | 0.749 (0.533) | 0.097 (0.281) | 0.159 (0.128) | −0.097 (0.101) | |
| Mixed Coins | −0.266 (0.422) | −0.101 (0.195) | −0.295 (0.126) | ||
| 50% Coins | 0.429 (1.176) | −0.286 (0.280) | |||
| Individual Deductible | −0.487 0.187 |
||||
| Panel B: Elasticities of Total Spending w.r.t Various Price Measures | ||||
|---|---|---|---|---|
| Coinsurance Rate | Average Out-of-Pocket Price | |||
| Arc Elasticitya | Elasticityb | Arc Elasticitya | Elasticityb | |
| All Plans | −0.094 (0.066) | NA | −0.144 (0.051) | NA |
| All Plans Except Free Care | −0.039 (0.131) | −0.523 (0.082) | −0.133 (0.097) | −0.524 (0.085) |
| All Plans Except Free Care and Ind. Deductible | −0.039 (0.108) | −0.537 (0.084) | −0.038 (0.108) | −0.600 (0.094) |
Table Notes: Panel A reports the pairwise arc-elasticities caluclated based on Table 2, column 2. Panel B reports the sample-size weighted average of various pairwise elasticities, calculated as detailed in the column-specific notes. Standard errors are in parentheses below the coefficient values. Standard errors are clustered on family. Arc-elasticity standard errors are bootstrapped standard errors based on 500 replications, clustered on family.
Pairwise arc-elasticities are calculated as the change in total spending as a percentage of the average, divided by the change in price as a percentage of the average price, where the price is either the coinsurance rate of the plan (in Panel A) or (in panel B) either (depending on the column) the coinsurance rate of the the average out-of-pocket price paid by people assigned to that plan (the average out-of-pocket price of each plan is shown in Table 1).
Elasticities are calculated based on pairwise regressions of log(total spending + 1) on log(price), where price is either the coinsurance rate of the plan or the average out-of-pocket price paid by people assigned to that plan.
For the mixed coinsurance plan and the individual deductible plan, we take the initial price to be the average of the two coinsurance rates, weighted by the shares of initial claims that fall into each category. For the mixed coinsurance rate plans, this gives an initial price of 32 percent. For the individual deductible plan, it gives an initial price of 58 percent.