Cream Skimming by Health Care Providers and Inequality in Health Care Access

Objective

This paper uses a randomized field experiment in a well-suited institutional setting outside the U.S. to show that specialists cream-skim the more profitable privately insured patients and discriminate against the publicly insured because of lower reimbursement rates.

Methods

In the German two-tier system, reimbursement rates for both the publicly and privately insured are centrally determined and fixed but more than twice as high for the privately insured. In addition, the privately insured are on average healthier, have higher incomes, and their reimbursement is 100% fee-for-service. In our field experiment, we selected a total of 36 representative counties (both urban and rural) and called a total of 991 outpatient specialists to ask for wait times and make appointments for elective medical treatments. We called each practice twice, once as a fictitious privately insured new patient and once as a fictitious publicly insured new patient, randomizing the insurance status over the two calls. In other words, the same test person called each private outpatient practice twice following the exact same protocol, thereby ensuring balanced covariates by construction. This allows us to carry out straightforward statistical tests to assess whether extensive and intensive access barriers to health care differ significantly by insurance status.

Results

Our findings show that access to the health care system differs significantly between the privately and publicly insured, both on the extensive and intensive margin. The likelihood of being offered an appointment is a highly significant ten percent larger for privately insured patients. Moreover, conditional on being offered an appointment, the wait times for publicly insured patients are more than twice as long, on average 13 weekdays longer.

Conclusion

The paper makes important contributions to the literature. Although the literature on physician behavior and treatment styles is rich and traditional in economics (e.g., Clemens and Gottlieb 2014), the causal effects literature on how providers discriminate against less profitable patients is less diverse. We contribute to a better understanding of the role of varying reimbursement rates in achieving more equitable access to the health care system for disadvantaged population groups. Moreover, ours is one of the first real-word studies that leverage a randomized field experiment, calls almost one thousand providers twice, and randomizes the insurance status in a non-emergency outpatient setting.

Our findings yield important insights into the driving forces of inequality in health care access. They suggest that uniform reimbursement rates could help mitigate inequality in health care access and align economic incentives with medical needs and priorities.