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The Demand for Physician Services. Evidence from a Natural Experiment

  • Bart COCKX

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

  • Carine BRASSEUR

This study exploits a natural experiment in Belgium to estimate the effect of co-payment increases on the demand for physician services. It shows how a differences-in-differences estimator of the price effects can be decomposed into effects induced by the common average proportional price increase (income effects) and by the change in relative prices (substitution effects). The price elasticity of a uniform proportional price increase is relatively small (-.13 for mean and -.03 for woman). Substitution effects are large, especially for women, but imprecisely estimated. Despite the substantial price increases, the efficiency gain of the reform, if any, is modest

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Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) with number 2001027.

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Length: 37
Date of creation: 01 Oct 2001
Date of revision:
Handle: RePEc:ctl:louvir:2001027
Contact details of provider: Postal: Place Montesquieu 3, 1348 Louvain-la-Neuve (Belgium)
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  1. Kenneth I. Wolpin & Mark R. Rosenzweig, 2000. "Natural "Natural Experiments" in Economics," Journal of Economic Literature, American Economic Association, vol. 38(4), pages 827-874, December.
  2. Cockx, Bart & Ridder, Geert, 1996. "Social employment of welfare recipients in Belgium: an evaluation," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1996018, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  3. Parks, Richard W., 1980. "On the estimation of multinomial logit models from relative frequency data," Journal of Econometrics, Elsevier, vol. 13(3), pages 293-303, August.
  4. Nyman, John A., 1999. "The economics of moral hazard revisited," Journal of Health Economics, Elsevier, vol. 18(6), pages 811-824, December.
  5. Daniel Feenberg & Jonathan Skinner, 1992. "The Risk and Duration of Catastrophic Health Care Expenditures," NBER Working Papers 4147, National Bureau of Economic Research, Inc.
  6. Zeckhauser, Richard, 1970. "Medical insurance: A case study of the tradeoff between risk spreading and appropriate incentives," Journal of Economic Theory, Elsevier, vol. 2(1), pages 10-26, March.
  7. Timothy Besley & Anne Case, 1994. "Unnatural Experiments? Estimating the Incidence of Endogenous Policies," NBER Working Papers 4956, National Bureau of Economic Research, Inc.
  8. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
  9. Meyer, Bruce D, 1995. "Natural and Quasi-experiments in Economics," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 151-61, April.
  10. McGuire, Thomas G., 2000. "Physician agency," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 9, pages 461-536 Elsevier.
  11. Amemiya, Takeshi & Nold, Frederick C, 1975. "A Modified Logit Model: A Note," The Review of Economics and Statistics, MIT Press, vol. 57(2), pages 255-57, May.
  12. Feldstein, Martin & Friedman, Bernard, 1977. "Tax subsidies, the rational demand for insurance and the health care crisis," Journal of Public Economics, Elsevier, vol. 7(2), pages 155-178, April.
  13. Hausman, Jerry A, 1978. "Specification Tests in Econometrics," Econometrica, Econometric Society, vol. 46(6), pages 1251-71, November.
  14. Barten, A. P. & Geyskens, E., 1975. "The negativity condition in consumer demand," European Economic Review, Elsevier, vol. 6(3), pages 227-260, July.
  15. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
  16. Feldman, Roger & Dowd, Bryan, 1991. "A New Estimate of the Welfare Loss of Excess Health Insurance," American Economic Review, American Economic Association, vol. 81(1), pages 297-301, March.
  17. Joseph P. Newhouse & Charles E. Phelps, 1976. "New Estimates of Price and Income Elasticities of Medical Care Services," NBER Chapters, in: The Role of Health Insurance in the Health Services Sector, pages 261-320 National Bureau of Economic Research, Inc.
  18. Manning, Willard G. & Marquis, M. Susan, 2001. "Health insurance: tradeoffs revisited," Journal of Health Economics, Elsevier, vol. 20(2), pages 289-293, March.
  19. Chiappori, Pierre-Andre & Durand, Franck & Geoffard, Pierre-Yves, 1998. "Moral hazard and the demand for physician services: First lessons from a French natural experiment," European Economic Review, Elsevier, vol. 42(3-5), pages 499-511, May.
  20. Nolan, Brian, 1993. "Economic incentives, health status and health services utilisation," Journal of Health Economics, Elsevier, vol. 12(2), pages 151-169, July.
  21. Keller, W.J. & Van Driel, J., 1985. "Differential consumer demand systems," European Economic Review, Elsevier, vol. 27(3), pages 375-390.
  22. Bart L. W. Cockx, 2000. "Analysis Of Transition Data By The Minimum-Chi-Square Method: An Application To Welfare Spells In Belgium," The Review of Economics and Statistics, MIT Press, vol. 79(3), pages 392-405, August.
  23. Newhouse, Joseph P. & Phelps, Charles E. & Marquis, M. Susan, 1980. "On having your cake and eating it too : Econometric problems in estimating the demand for health services," Journal of Econometrics, Elsevier, vol. 13(3), pages 365-390, August.
  24. Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-77, June.
  25. Davis, Karen & Russell, Louise B, 1972. "The Substitution of Hospital Outpatient Care for Inpatient Care," The Review of Economics and Statistics, MIT Press, vol. 54(2), pages 109-20, May.
  26. Carine Van De Voorde & Eddy Van Doorslaer & Erik Schokkaert, 2001. "Effects of cost sharing on physician utilization under favourable conditions for supplier-induced demand," Health Economics, John Wiley & Sons, Ltd., vol. 10(5), pages 457-471.
  27. Zweifel, Peter & Manning, Willard G., 2000. "Moral hazard and consumer incentives in health care," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 8, pages 409-459 Elsevier.
  28. Besley, Timothy J., 1988. "Optimal reimbursement health insurance and the theory of Ramsey taxation," Journal of Health Economics, Elsevier, vol. 7(4), pages 321-336, December.
  29. Feldstein, Martin S, 1973. "The Welfare Loss of Excess Health Insurance," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 251-80, Part I, M.
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  31. repec:cup:cbooks:9780521296762 is not listed on IDEAS
  32. Manning, Willard G. & Marquis, M. Susan, 1996. "Health insurance: The tradeoff between risk pooling and moral hazard," Journal of Health Economics, Elsevier, vol. 15(5), pages 609-639, October.
  33. Blomqvist, Ake, 2001. "Does the economics of moral hazard need to be revisited? A comment on the paper by John Nyman," Journal of Health Economics, Elsevier, vol. 20(2), pages 283-288, March.
  34. Amemiya, Takeshi, 1981. "Qualitative Response Models: A Survey," Journal of Economic Literature, American Economic Association, vol. 19(4), pages 1483-1536, December.
  35. Nyman, John A., 2001. "The income transfer effect, the access value of insurance and the Rand health insurance experiment," Journal of Health Economics, Elsevier, vol. 20(2), pages 295-298, March.
  36. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6 National Bureau of Economic Research, Inc.
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