Impact of medical subsidy disqualification on children's healthcare utilization: A difference-in-differences analysis from Japan

Financial support for children's medical expenses has been introduced in many countries. Limited work has been done on price elasticity in children's healthcare demand, especially in countries other than the United States. Moreover, it remains unclear how the effects of a change in the cost sharing rate on healthcare demand would differ by medical condition. We investigated the impact of an increase in the cost sharing rate on medical service utilization among school children as a whole and for each of nine common conditions, applying a difference-in-differences approach. The study period ranged from April 1, 2012, to March 30, 2014. Participants were elementary school children in an urban area who were eligible for National Health Insurance (a community-based public insurance) during the study period and who were enrolled in the 2nd, 3rd, or 4th grade in April 2013. We collected observations from 2896 persons and 69,504 (2896 × 24 months) person-months. When elementary school children were promoted to the 4th grade, they became disqualified for a municipal medical subsidy. The control group was the children promoted to the 2nd or the 3rd grade, who remained eligible for the subsidy. All data were obtained from health insurance claims. We identified the nine most common medical conditions among the subject children, and stratified the analyses by the condition diagnosed. We found that an increase in the cost sharing rate reduced outpatient service utilization as a whole. Also, we observed an increase in inpatient service utilization, not because of worsened health conditions, but rather due to substitution of inpatient service for outpatient service. The reductions in outpatient service were heterogeneous across medical conditions; declines were sharper for mild or chronic conditions. These findings may help to characterize how a change in cost sharing rate affects health outcomes in children.