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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.

Suggested Citation

  • Duarte, Fabian, 2012. "Price elasticity of expenditure across health care services," Journal of Health Economics, Elsevier, vol. 31(6), pages 824-841.
  • Handle: RePEc:eee:jhecon:v:31:y:2012:i:6:p:824-841
    DOI: 10.1016/j.jhealeco.2012.07.002
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    References listed on IDEAS

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    More about this item

    Keywords

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

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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