New estimates of the demand for physical and mental health treatment.
Consumers' price responsiveness is central to US health-care reform proposals, but the best available estimates are now more than 25 years old. We estimate health-care demands by calculating expected end-of-year prices and incorporating them into a zero-inflated ordered probit model applied to several overlapping panels of data from 1996 to 2003. Results from our correlated random effects specification indicate that the price responsiveness of ambulatory mental health treatment has decreased substantially and is now slightly lower than physical health treatment. This suggests that concerns over moral hazard alone do not warrant less generous coverage for mental health. However, prescription drug demand is more price elastic.
Department of Economics, Lehigh University, Bethlehem, PA 18015, USA. chad.meyerhoefer@lehigh.edu
Chad D
CD
Meyerhoefer
Samuel H
SH
Zuvekas
D000553:Ambulatory Care / Q000191:economics; D004180:Direct Service Costs; D016527:Drug Costs; D005102:Health Expenditures; D006296:Health Services / Q000191:economics / Q000600:supply & distribution; D006301:Health Services Needs and Demand / Q000191:economics; D006801:Humans; D008605:Mental Health Services / Q000191:economics / Q000600:supply & distribution; D017059:Models, Econometric; D055553:Prescription Drugs / Q000191:economics; D014481:United States
D055553:Prescription Drugs