The Effect of a Bonus Program for Preventive Health Behavior on Health Expenditures

This paper contributes to the analysis of policy measures that attempt to reduce health care expenditures of insurers. We examine the impact of a cash bonus program for preventive health behavior of a German health insurer on prevention eff ort and health care expenditures using a unique administrative dataset that covers all insurants of the health insurer between 2003 and 2008. We fi nd that the program has been successful in both increasing individual prevention eff ort and achieving net savings every year since its implementation in 2004. However, while the estimated eff ect on health care expenditures is statistically signifi cant in the fi rst year, the effects for the second, third, and fourth years turn insignifi cant. In the fi fth year, results for net savings are sensitive in terms of statistical signifi cance when accounting for dynamic selection into the treatment.