Using data from the 1992 US National Survey of Veterans, we analyze Medicare-eligible veterans' use of VA and non-VA outpatient health care services. We apply a utility consistent, combined multinomial choice and count data model to identify factors that affect these veterans' outpatient health care usage and facility choices, with special reference to the effect of out-of-pocket cost, distance to the medical facility, and supplemental private medical insurance coverage. Our first stage count data regression shows that the out-of-pocket cost index calculated from the second stage multinomial choice model is significant in determining the Medicare-eligible veterans' demand of outpatient health care services. The calculated cost index elasticity of outpatient visits is about -0.65. In the second stage, we specify a multinomial choice model to study veterans' allocation of outpatient visits between VA and non-VA health care facilities, and we find that veterans' out-of-pocket cost and the distance to the health care facility have significantly negative effects on the probability of choosing the alternative. A number of other factors including family income, insurance status, means of transportation, home ownership, race, employment, health, disability status and diagnostic conditions were also found to be important at various stages of the decision making. We find no evidence of adverse selection in the market for supplemental private health insurance. The model is used to simulate the impact of alternative copayment policies on the demand for VA outpatient health care services.
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Paper provided by University at Albany, SUNY, Department of Economics in its series Discussion Papers with number
02-01.
Length: Date of creation: 2002 Date of revision: Handle: RePEc:nya:albaec:02-01
Contact details of provider: Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A. Phone: (518) 442-4735 Fax: (518) 442-4736
Find related papers by JEL classification: I12 - Health, Education, and Welfare - - Health - - - Health Production I28 - Health, Education, and Welfare - - Education - - - Government Policy C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models
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