The Impact of Supplier Induced Demand on Increase in Medical Aid Expenditure

Abstract

Background: A need arises to efficiently control health expenditure for medical aid due to a sharp increase in medical aid expenditure. This study experimently analyzes the impact of physician behavior on medical use for medical aid beneficiaries using supplier induced demand (SID) theory. Methods: This study looks into analyze SID effect using expenditure factor analysis of medical aid for the years between 2003 and 2010 in comparison with health insurance. Moreover, this study analyzes the existence and scale of SID using econometrics modeling with panel data on 16 cities and provinces's health expenditure data for medical aid from 2003 1/4 to 2010 4/4. Results: This study finds that the growth rate of visit days per capita and treatment amount per visit days for medical aid is higher than health insurance. Furthermore, the result of econometrics modeling analysis shows the existence of SID in general hospital, hospital, clinic, oriental clinic. Conclusion:In order to efficiently control expenditure for medical aid, it is required to reinforce macro polices such as the introduction of 'target management' and micro policies such as the strengthen of management on medical institutes in the perspective of suppliers as well as regulations of demanders.

Factors influencing health care use by health insurance subscribers and medical aid beneficiaries: a study based on data from the Korea welfare panel study database

“…Total medical expenses also increased, with growth rates similar to that of health insurance expenses, from 4.2 trillion won to 6 trillion won during the same period [3]. However, health care service use and number of hospitalization days in medical aid beneficiaries were about four times higher than that in health insurance subscribers, and the medical expenses per person in medical aid beneficiaries were about 3.6 times higher than that in health insurance subscribers [4]. It has been argued that medical aid beneficiaries' overuse of free medical services has been deemed one of the main causes for the rise in medical costs.…”

Has China’s Healthcare Reform Reduced the Number of Patients in Large General Hospitals?

“…If this inefficient use is not dealt with effectively, it may result in a serious waste of resources. Previous studies [54,55] have shown that, when medical insurance coverage is universal, there is a moral hazardmedical service providers may over-provide medical services, and patients may overuse medical services. For example, expensive tests such as transthoracic echocardiography [56] and various imaging examinations [57][58][59] are performed in patients with low probability of pre-examination.…”