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Price elasticity of expenditure across health care services

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  • Duarte, Fabian

Abstract

Policymakers in countries around the world are faced with rising health care costs and are debating ways to reform health care to reduce expenditures. Estimates of price elasticity of expenditure are a key component for predicting expenditures under alternative policies. Using unique individual-level data compiled from administrative records from the Chilean private health insurance market, I estimate the price elasticity of expenditures across a variety of health care services. I find elasticities that range between zero for the most acute service (appendectomy) and −2.08 for the most elective (psychologist visit). Moreover, the results show that at least one third of the elasticity is explained by the number of visits; the rest is explained by the intensity of each visit. Finally, I find that high-income individuals are five times more price sensitive than low-income individuals and that older individuals are less price-sensitive than young individuals.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 31 (2012)
Issue (Month): 6 ()
Pages: 824-841

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Handle: RePEc:eee:jhecon:v:31:y:2012:i:6:p:824-841

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Web page: http://www.elsevier.com/locate/inca/505560

Related research

Keywords: Elasticity; Health economics; Health expenditures; Consumer behavior; Moral hazard;

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References

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Cited by:
  1. Supon Limwattananon & Sven Neelsen & Owen O'Donnell & Phusit Prakongsai & Viroj Tangcharoensathien & Eddy van Doorslaer, 2013. "Universal Coverage on a Budget: Impacts on Health Care Utilization and Out-Of-Pocket Expenditures in Thailand," Tinbergen Institute Discussion Papers 13-067/V, Tinbergen Institute.
  2. Supon Limwattananon & Sven Neelsen & Owen O'Donnell & Phusit Prakongsai & Viroj Tangcharoensathien & Eddy van Doorslaer, 2013. "Universal Coverage on a Budget: Impacts on Health Care Utilization and Out-Of-Pocket Expenditures in Thailand," Tinbergen Institute Discussion Papers 13-067/V, Tinbergen Institute.
  3. Amanda E. Kowalski, 2012. "Estimating the Tradeoff Between Risk Protection and Moral Hazard with a Nonlinear Budget Set Model of Health Insurance," NBER Working Papers 18108, National Bureau of Economic Research, Inc.
  4. Abe Dunn, 2014. "Health Insurance and the Demand for Medical Care: Instrumental Variable Estimates Using Health Insurer Claims Data," BEA Working Papers 0107, Bureau of Economic Analysis.
  5. Cristian Pardo & Whitney Schott, 2012. "Public versus private: evidence on health insurance selection," International Journal of Health Care Finance and Economics, Springer, vol. 12(1), pages 39-61, March.

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