China’s medical savings accounts: an analysis of the price elasticity of demand for health care

Hao Yu ()
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Hao Yu: RAND Corporation

The European Journal of Health Economics, 2017, vol. 18, issue 6, No 10, 773-785

Abstract: Abstract Although medical savings accounts (MSAs) have drawn intensive attention across the world for their potential in cost control, there is limited evidence of their impact on the demand for health care. This paper is intended to fill that gap. First, we built up a dynamic model of a consumer’s problem of utility maximization in the presence of a nonlinear price schedule embedded in an MSA. Second, the model was implemented using data from a 2-year MSA pilot program in China. The estimated price elasticity under MSAs was between −0.42 and −0.58, i.e., higher than that reported in the literature. The relatively high price elasticity suggests that MSAs as an insurance feature may help control costs. However, the long-term effect of MSAs on health costs is subject to further analysis.

Keywords: Medical savings accounts; Health insurance; Nonlinear price schedule; Elasticity; Demand for health care; China (search for similar items in EconPapers)
JEL-codes: I13 I18 N35 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10198-016-0827-9

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