Will people spend less on health care if their health insurance requires them to

Question

Will people spend less on health care if their health insurance requires them to pay some part of the cost themselves? An experiment on this issue asked if the percentage of the medical costs that are paid by health insurance has an effect either on the amount of medical care that people use or their health. The treatment were 4 medical plans. Each plan paid all medical costs above a ceiling. Below the ceiling, the plans 100%, 75%, 50% or 0% of costs incurred. Outline the design of a randomized comparative experiment suitable for this study.

Explanation / Answer

Answer to the question)

The claim to be tested is: will people spend less on health care if they are asked to pay some part of the cost themselves. This implies that we expect that if the percent of self cash payement icreases , it will reduce the spending on health care. SO in order to find out whether this claim is true or not , then we can use all the four treatments to design the experiment as explained below:

We can launch the 4 plans of different percent of cash payment by customers: in 4 different markets and see how the sales of such plan is :

For example: Branch A : 100% plan

Branch B : 75% plan

Branch C: 50% plan

Branch D : 0% plan

all the four plans can be launched simultaneously , and then the sales of each plan can be recorded for say 30days.

Like wise we will get number of sales done for each of the plan can be obtained

this data , can be analyzed with the help of a T test.

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