Wonjun Lyou

We examine the effects of patient cost‐sharing on adolescents' healthcare utilization and out‐of‐pocket medical expenditures by exploiting the healthcare reform in South Korea that lowered the coinsurance rate for inpatient care from 20% to 5% for children under 16. We apply a difference‐in‐regression‐discontinuities design using administrative claims data. We find that the reform increased adolescents' inpatient care utilization. It also reduced out‐of‐pocket healthcare expenditures. This effect was larger among low‐income households, facilitating income redistribution. However, the lack of evidence on health improvements and household consumption spending responses suggests that generous patient cost‐sharing for adolescent healthcare may cause efficiency losses.