One of the major public health policy debates in the recent years is the rising costs of
Civil Servants Medical Benefit Scheme (CSMBS), especially for outpatient care. Nationally, the
CSMBS outpatient costs had steadily increased since the 1990s but started skyrocketing in
2004. Several government agencies and scholars have tended to blame this rapid rise on the
new reimbursement policy (the Direct Payment (DP) program), which took place in the same
year. Before the DP program was introduced, CSMBS beneficiaries had to cover the full cost of
their outpatient services first, and process the reimbursement afterward. The DP program
replaced this old payment system by having the government pay to the hospitals directly.
Although the DP program seems to be the most probable source of the rising CSMBS
costs, there is no careful analysis to support the argument. Comparing aggregate costs beforeand-
after the policy change would overstate the DP effect due to other factors (e.g., a steady
increase in the number of aging population and a self-selection problem). Our study aims to
carefully examine the impact of the DP on utilization and cost per patient. We employ patientlevel
data from Saraburi Hospital, a large regional hospital, which CSMBS costs closely mimics
the nation’s trend. Its CSMBS outpatient costs rose approximately 10% per year prior to
2004and soared to 31-37% per year between 2004 and 2009.
Our analysis focuses on two issues. First, we examine the key determinants of the
change in outpatient costs during 2004-2009, by breaking down the total change in outpatient
costs into the change in the number of patients being treated and the change in cost per
treated patient. Second, we study the impact at the initial stage of the DP program where
eligibility was restricted to beneficiaries with four specific chronic diseases.
Our results indicate that during the first two years where only chronic disease patients
were eligible, the increase in the costs was driven by the higher cost per patient rather than the
larger number of patients being treated. This suggests that some enrolling patients might over
utilize healthcare services or ask for unnecessary prescriptions. In contrast, when the program
was fully expanded to cover all CSMBS beneficiaries, the number of new patients turned to be
the major factor accounting for the increase in the costs. This is not surprising given that
patients with chronic diseases were more likely to incur higher costs, and most of the patients
with chronic diseases had enrolled earlier. The effect of the initial stage of the DP program on visits and cost per patient were
assessed by the difference-in-difference approach. We find that, on average, patients enrolled
in the DP program increased their number of visits by 18.3%. In addition, the average
outpatient cost per participant increased by 35.4% comparing to their cost before enrollment.
Finally, we show that the estimates from simply comparing visits or costs before-andafter
policy change largely overstated the effect of the DP program. For visits, the estimate from
the simple comparison is +24.5%, while our estimate from the differences-in-differences
approach is +18.3%. The simple comparison also suggests a considerably larger effect of the
DP program on the outpatient costs (+108.8% vs. +35.4%).
These results underscore the need for careful evaluation of policy changes. Our study
only takes a modest step toward such direction. An important area for future research is to
identify sources of treatment intensity associated with certain prescriptions or diagnostics. We
are not able to trace such details since the outpatient financing records from Saraburi Hospital
do not contain charges by item. A clearer understanding of the factors accounting for the recent
rise in the healthcare costs will prove critical for crafting cost containment strategies.