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Effects of price and deductibles on medical care demand, estimated from survey data


  • C. J. A. Van Vliet Rene


This paper estimates the price sensitivity of medical care demand from cross-sectional survey data by relating medical consumption to approximated copayment rates resulting from deductibles. Instead of the deductibles itself, a transformation is used that better takes into account that expected expenditures at policy level play an important role in the reaction of consumers with regard to their deductible. This transformation approximates the average expected copayment rate, that is, the portion of expenditures that one may expect - at the beginning of the year - to pay out-of-pocket, given the deductible and given the expected expenditures at policy level. The principal finding is an estimated price elasticity of medical care demand of -0.079. The highest price sensitivity was found for physiotherapy visits (-0.12) and general practitioner visits (-0.085), and the lowest for specialist visits (-0.074) and prescription drugs (-0.056). Hospital care demand appeared not to be affected by deductibles.

Suggested Citation

  • C. J. A. Van Vliet Rene, 2001. "Effects of price and deductibles on medical care demand, estimated from survey data," Applied Economics, Taylor & Francis Journals, vol. 33(12), pages 1515-1524.
  • Handle: RePEc:taf:applec:v:33:y:2001:i:12:p:1515-1524
    DOI: 10.1080/00036840010013626

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    References listed on IDEAS

    1. Hylleberg, S. & Engle, R. F. & Granger, C. W. J. & Yoo, B. S., 1990. "Seasonal integration and cointegration," Journal of Econometrics, Elsevier, vol. 44(1-2), pages 215-238.
    2. Perron, Pierre, 1989. "The Great Crash, the Oil Price Shock, and the Unit Root Hypothesis," Econometrica, Econometric Society, vol. 57(6), pages 1361-1401, November.
    3. Engle, R. F. & Granger, C. W. J. & Hylleberg, S. & Lee, H. S., 1993. "The Japanese consumption function," Journal of Econometrics, Elsevier, vol. 55(1-2), pages 275-298.
    4. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
    5. Ghysels, Eric & Lee, Hahn S. & Noh, Jaesum, 1994. "Testing for unit roots in seasonal time series : Some theoretical extensions and a Monte Carlo investigation," Journal of Econometrics, Elsevier, vol. 62(2), pages 415-442, June.
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    Cited by:

    1. Magnezi, Racheli & Weiss, Yossi & Cohen, Yossi & Shmueli, Amir, 2007. "Development of a capitation scale for IDF career soldiers in Israel," Health Policy, Elsevier, vol. 80(3), pages 459-464, March.
    2. Ed Westerhout & Kees Folmer, 2013. "Why it may hurt to be insured: the effects of capping coinsurance payments," CPB Discussion Paper 239, CPB Netherlands Bureau for Economic Policy Analysis.
    3. Mas, Nuria & Cirera, Laia & Viñolas, Guillem, 2011. "Los sistemas de copago en Europa, Estados Unidos y Canadá: Implicaciones para el caso español," IESE Research Papers D/939, IESE Business School.

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