Where did civil servants go? the effect of an increase in public co-payments on double insured patients

Sofia Vaz, Pedro Ramos

In Portugal, Civil Servants may have a differential utilization of health services due to their supplementary Health Subsystem (ADSE), which grants them access to health services in the private sector at lower price. We exploit the impact of this double coverage on the demand for Portuguese Public Emergency Departments (ED), following the recent increase in co-payments for public health care services in Portugal.Using detailed ED level data from three different EDs, one for each level of the Portuguese ED care, we rely on a difference-in-differences strategy, under the assumption that both civil servants and National Health Service (NHS) users were targeted by the public co-payment increase, but just the former have a low-cost alternative in the private sector that they can use when prices increase in the NHS.We found that the existence of a low-price alternative in the private sector caused ED demand to decrease among ADSE beneficiaries following a policy that increased co-payments in public NHS hospitals. Specifically, we show that this decrease was only significant for conditions which have arguably the closest substitutes in the private sector - the low and intermediate-severity conditions - and to patients who lived closer to the ED and to whom the co-payment was the largest share of the ED visit cost.These findings cast some concerns over the equity of the Portuguese Health System, since civil servants increasingly opt out from public health services but must co-fund both the ADSE and the NHS.