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Effects of price and deductibles on medical care demand, estimated from survey data

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Abstract:

This paper estimates the price sensitivity of medical care demand from cross-sectional survey data by relating medical consumption to approximated copayment rates resulting from deductibles. Instead of the deductibles itself, a transformation is used that better takes into account that expected expenditures at policy level play an important role in the reaction of consumers with regard to their deductible. This transformation approximates the average expected copayment rate, that is, the portion of expenditures that one may expect - at the beginning of the year - to pay out-of-pocket, given the deductible and given the expected expenditures at policy level. The principal finding is an estimated price elasticity of medical care demand of -0.079. The highest price sensitivity was found for physiotherapy visits (-0.12) and general practitioner visits (-0.085), and the lowest for specialist visits (-0.074) and prescription drugs (-0.056). Hospital care demand appeared not to be affected by deductibles.

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036840010013626

Publication date: October 10, 2001

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