Beomsoo Kim () (Department of Economics, Korea University, Seoul, South Korea)
Abstract
There is a huge variation in medical utilization across geographic areas in the U.S. In addition, supply of medical care is positively correlated with demand. One commonly suspected possibility is physicians induce demand using their superior medical knowledge. This paper tests the supply induced demand in medicine using the exogenous negative income shock to Obstetrics/Gynecologists due to the declining number of births in their practice area. The number of births declined more than 8 % from 1989 to 1999 and physicians may decide to choose the cesarean section instead of normal delivery, as the cesarean section is reimbursed at a higher pay rate. Physicians might also provide more prenatal care than medically necessary in order to make up their own income under the fee for service reimbursement mechanism. Some evidence of induced demand in OB/GYNs practice pattern has been found. It has been found that the cesarean section would increase by 0.5 percentage points with a unit decline of birthrate per a population of 100, but prenatal care visits did not change.
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Publisher Info
Paper provided by Institute of Economic Research, Korea University in its series Discussion Paper Series with number
0901.
Find related papers by JEL classification: I12 - Health, Education, and Welfare - - Health - - - Health Production I19 - Health, Education, and Welfare - - Health - - - Other J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
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