This paper exploits longitudinal insurance claims data and a cost-sharing subsidy that has exempted co-payment and coinsurance of healthcare services for children under the age of 3 in Taiwan. We use a regression discontinuity design to estimate its effect on children’s healthcare utilization. Our results show that cost-sharing subsidy significantly increases the utilization of outpatient care, especially low-value care at high-cost hospitals. In contrast, the utilization of inpatient care is price insensitive. Finally, we find that a lower level of cost-sharing has little impact on children’s health.