The effectiveness of financial incentives in controlling the health care expenditures of seniors

This paper examines whether financial incentives imposed on health insurers are effective or not in containing the health care expenditures of seniors. Under the Japanese health care system, the degree of financial incentives to restrain the health care expenditures of seniors varied significantly among almost 5300 insurers. The extent to which the strength of financial incentives is related to the actual health care expenditures is analyzed. The results indicate that financial incentives do not appear to restrain expenditures significantly.