Health insurance and the demand for medical care: Instrumental variable estimates using health insurer claims data.
This paper takes a different approach to estimating demand for medical care that uses the negotiated prices between insurers and providers as an instrument. The instrument is viewed as a textbook "cost shifting" instrument that impacts plan offerings, but is unobserved by consumers. The paper finds a price elasticity of demand of around -0.20, matching the elasticity found in the RAND Health Insurance Experiment. The paper also studies within-market variation in demand for prescription drugs and other medical care services and obtains comparable price elasticity estimates.
Bureau of Economic Analysis, United States. Electronic address: abe.dunn@bea.gov.
Abe
A
Dunn
D003132:Commerce; D003361:Cost Allocation; D006301:Health Services Needs and Demand; D006801:Humans; D007182:Income; D007343:Insurance Carriers; D007348:Insurance, Health
Commercial health insurance; Instrumental variable; Insurance claims; Medical care demand; Price elasticity