Health care demand elasticities by type of service

Abstract

We estimate within-year price elasticities of demand for detailed health care services using an instrumental variable strategy, in which individual monthly cost shares are instrumented by employer-year-plan-month average cost shares. A specification using backward myopic prices gives more plausible and stable results than using forward myopic prices. Using 171 million person-months spanning 73 employers from 2008–2014, we estimate that the overall demand elasticity by backward myopic consumers is −0.44, with high elasticities of demand for pharmaceuticals (−0.44), specialists visits (−0.32), MRIs (−0.29) and mental health/substance abuse (−0.26), and lower elasticities for prevention visits (−0.02), and emergency rooms (−0.04). Demand response is lower for children, in larger firms, among hourly waged employees, and for sicker people. Overall the method appears promising for estimating elasticities for highly disaggregated services although the approach does not work well on services that are very expensive or persistent.

The affordable care act and ambulance response times

“…Not surprisingly, our results are quite similar to those of Courtemanche et al (2017a). We find that the ACA increased health insurance coverage by 5 percentage points in states that expanded Medicaid and 9 Also see Ellis, Martins and Zhu (2017). Using data on 171 million person-months from MarketScan, the authors found a price elasticity of demand for ambulance services of -1 among "forward-looking" individuals, suggesting that extending insurance coverage under the ACA would increase utilization of ambulance services.…”

The demand for preventive and restorative dental services among older adults

“…The finding that consumers are not price-sensitive, conditional on insurance enrollment, is in contrast to what has been found for medical care (see, for example, Ellis, Martins, & Zhu, 2017;Meyerhoefer & Zuvekas, 2010). Nonetheless, MZM note that even older studies of dental care demand found that consumers were not price-sensitive over a broad range of out-of-pocket costs.…”

Determinants of Willingness to Pay for Pharmacists Provided Medication-Related Services Among Outpatients in South-Eastern Nigeria Teaching Hospitals

“…The price elasticities of demand for MERS was consistent with those of previously reported pharmacist's services. Overall, the demand for healthcare services is price inelastic 30,31 . However, preventive care and drug-related services appear to be less sensitive to price changes compared to other health care services 32 .…”