Essays in Health Economics

Abstract

What effects does higher patient cost sharing have on the use of mental health care, patient outcomes, and provider behavior? This dissertation explores this question by investigating the effects of a national reform in the Netherlands that raised the out-of-pocket price for mental health care. The first chapter shows that the reform was associated with a decrease in the use of regular treatment but an increase in the use of involuntary commitment and acute mental health care. Although the reform led to net savings, the additional costs of involuntary commitment and acute mental health care exceeded savings for adults with psychotic disorder or bipolar disorder. The second chapter shows that the reform led to a loss of employment driven by individuals who decided not to continue treatment because of the higher cost sharing. This result suggests that mental health, like education and physical health, should be viewed as an important part of human capital that can depreciate and be repaired through investment in mental health care. The third chapter shows that the decrease in patient demand after the cost-sharing reform led providers to treat patients for longer on average. Because this provider response did not improve patient outcomes, we characterize it as provider-induced demand. Together, our results highlight three factors that must be considered when designing optimal health insurance: downstream costs within the health care system; externalities outside of the health care system, such as economic productivity loss that is shifted onto society in the form of increased unemployment or disability; and, provider response, which reduces health savings from higher patient cost sharing.