Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment

Manning, Willard G, et al
Authors registered in the RePEc Author Service: Joseph Newhouse and Willard G. Manning

American Economic Review, 1987, vol. 77, issue 3, 251-77

Abstract: The authors estimate how cost sharing, the portion of the bill the patient pays, affects demand for medical services. The data come from a randomized experiment. A catastrophic insurance plan reduces expend itures 31 percent relative to zero out-of-pocket price. The price elasticity is approximately A0.2. The post-World War II growth in medical expenditures is either largely attributable to technological change induced by increased insurance coverage, a hypothesis that cannot be tested, or to factors other than increased insurance coverage. The authors reject the hypothesis that less favorable coverage of outpatient services increases total expenditure, e.g., by deterring preventive care. Coauthors are Joseph P. Newhouse, Naihua Duan, Emmett B. Keeler, Arleen Leibowitz, and M. Susan Marquis. Copyright 1987 by American Economic Association.

Date: 1987
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