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The demand for medical care in Japan: initial findings from a Japanese natural experiment

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  • Mari Kan
  • Wataru Suzuki

Abstract

This study examines the effect of the 1997 increase in the coinsurance rate for household heads on the demand for medical care and estimates the price elasticity of demand using the change as a natural experiment. It analyses both outpatient and inpatient utilization by using health insurance claim data from 111 insurance associations. A differences-in-differences type estimator is employed with household heads as the treatment group and dependents as the control group. This represents the first comprehensive analysis of medical care demand in Japan using a natural experiment. The results indicate a price elasticity of outpatient care ranging from -0.05 to -0.06 but no significant effects on inpatient care of the increase in cost sharing. The price elasticity for outpatient care is lower than those from previous studies that have used observational comparisons of individuals in Japan and also smaller than those derived from a randomized experiment in the USA.

Suggested Citation

  • Mari Kan & Wataru Suzuki, 2006. "The demand for medical care in Japan: initial findings from a Japanese natural experiment," Applied Economics Letters, Taylor & Francis Journals, vol. 13(5), pages 273-277.
    • Handle: RePEc:taf:apeclt:v:13:y:2006:i:5:p:273-277
    DOI: 10.1080/13504850500398583
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    References listed on IDEAS

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    1. Atsushi Yoshida & Shingo Takagi, 2002. "Effects of the Reform of the Social Medical Insurance System in Japan," The Japanese Economic Review, Japanese Economic Association, vol. 53(4), pages 444-465, December.
    2. Jayanta Bhattacharya & William B. Vogt & Aki Yoshikawa & Toshitaka Nakahara, 1996. "The Utilization of Outpatient Medical Services in Japan," Journal of Human Resources, University of Wisconsin Press, vol. 31(2), pages 450-476.
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    Cited by:

    1. Abe, Yukiko, 2007. "The effectiveness of financial incentives in controlling the health care expenditures of seniors," Japan and the World Economy, Elsevier, vol. 19(4), pages 461-482, December.
    2. Tamie Matsuura & Masaru Sasaki, 2012. "Can the health insurance reforms stop an increase in medical expenditures for middle- and old-aged persons in Japan?," International Journal of Health Economics and Management, Springer, vol. 12(2), pages 163-187, June.
    3. Jiale Zhang, 2007. "A DID analysis of the impact of health insurance reform in the city of Hangzhou," Health Economics, John Wiley & Sons, Ltd., vol. 16(12), pages 1389-1402, December.
    4. Jiale Zhang, 2007. "A DID analysis of the impact of health insurance reform in the city of Hangzhou," Health Economics, John Wiley & Sons, Ltd., vol. 16(12), pages 1389-1402.
    5. Tamie Matsuura & Masaru Sasaki, 2010. "Can the Health Insurance Reforms stop an increase in medical costs of middle- and old-aged persons in Japan?," Discussion Papers in Economics and Business 10-13, Osaka University, Graduate School of Economics.
    6. Galina Besstremyannaya, 2012. "Heterogeneous effect of coinsurance rate on the demand for health care: a finite mixture approach," Working Papers w0163, New Economic School (NES).
    7. Galina Besstremyannaya, 2014. "Heterogeneous effect of coinsurance rate on healthcare costs: generalized finite mixtures and matching estimators," Discussion Papers 14-014, Stanford Institute for Economic Policy Research.
    8. Kan, Mari & Suzuki, Wataru, 2010. "Effects of cost sharing on the demand for physician services in Japan: Evidence from a natural experiment," Japan and the World Economy, Elsevier, vol. 22(1), pages 1-12, January.
    9. BURNEY, Nadeem A. & ALENEZI, Mohammad & HAMADA, Salwa & AL-MUSALLAM, Nadia, 2019. "The Demand for Public and Private Medical Care Services: Evidence from Kuwait," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 72(1), pages 107-138.
    10. Reona Hagiwara, 2022. "Welfare Effects of Health Insurance Reform: The Role of Elastic Medical Demand," IMES Discussion Paper Series 22-E-05, Institute for Monetary and Economic Studies, Bank of Japan.
    11. Galina Besstremyannaya, 2012. "Heterogeneous effect of coinsurance rate on the demand for health care: a finite mixture approach," Working Papers w0163, Center for Economic and Financial Research (CEFIR).

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