R ES E A R C H Open Access
Effect of reducing cost sharing for
outpatient care on children’s inpatient
services in Japan
and Rei Goto
Background: Assessing the impact of cost sharing on healthcare utilization is a critical issue in health economics
and health policy. It may affect the utilization of different services, but is yet to be well understood.
Objective: This paper investigates the effects of reducing cost sharing for outpatient services on hospital
admissions by exploring a subsidy policy for children’s outpatient services in Japan.
Methods: Data were extracted from the Japanese Diagnosis Procedure Combination database for 2012 and 2013. A
total of 366,566 inpatients from 1390 municipalities were identified. The impact of expanding outpatient care
subsidy on the volume of inpatient care for 1390 Japanese municipalities was investigated using the generalized
linear model with fixed effects.
Results: A decrease in cost sharing for outpatient care has no significant effect on overall hospital admissions,
although this effect varies by region. The subsidy reduces the number of overall admissions in low-income areas, but
increases it in high-income areas. In addition, the results for admissions by type show that admissions for diagnosis
increase particularly in high-income areas, but emergency admissions and ambulatory-care-sensitive-condition
admissions decrease in low-income areas.
Conclusions: These results suggest that outpatient and inpatient services are substitutes in low-income areas but
complements in high-income ones. Although the subsidy for children’s healthcare would increase medical costs, it
would not improve the health status in high-income areas. Nevertheless, it could lead to some health improvements in
low-income areas and, to some extent, offset costs by reducing admissions in these regions.
Keywords: Heath insurance, Cost sharing, Childcare, Inpatient care, Outpatient care
JEL codes: I12, I18, J13
Many countries have adopted patient cost sharing as
a way to control medical expenditures. However, the
effects of patient cost sharing are yet to be
completely understood. In particular, research on
health impacts, the distributional consequences of
cost sharing, and whether cost sharing for certain ser-
vices affects the use of other services is sparse .
Cost sharing for a service could affect the utilization
of the service itself (own-price effect) as well as reduce
the utilization of complementary services or increase
that of substitute services (cross-price effect). Therefore,
it is important to examine both the cross-price and
own-price effect. To this end, health policy studies have
long debated the relationship between outpatient and in-
patient services. While some insist that expanded access
to primary care can reduce admissions, leading to re-
duced healthcare costs , this argument was empiric-
ally denied by the results of the RAND Health Insurance
Experiment (HIE) in the mid-1970s [3, 4]. Given that
hospitalization and emergency department admissions
* Correspondence: email@example.com
Graduate School of Economics, Kyoto University, Yoshida-honmachi, Sakyo,
Kyoto 6068501, Japan
Full list of author information is available at the end of the article
© The Author(s). 2017 Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0
International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and
reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to
the Creative Commons license, and indicate if changes were made.
Kato and Goto Health Economics Review (2017) 7:28