Health Insurance and Demand for Medical Care

The Curious Economist| August 2020 The Demand for Medical Care Thomas R. Miller, PhD, MBA Thomas R. Miller, PhD, MBA Search for other works by this author on: This Site PubMed Google Scholar ASA Monitor August 2020, Vol. 84, 22–23. https://doi.org/10.1097/01.M99.0000695152.94898.49 Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Share Icon Share Facebook Twitter LinkedIn MailTo Cite Icon Cite Get Permissions Search Site Citation Thomas R. Miller; The Demand for Medical Care. ASA Monitor 2020; 84:22–23 doi: https://doi.org/10.1097/01.M99.0000695152.94898.49 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu toolbar search search input Search input auto suggest filter your search All ContentAll PublicationsASA Monitor Search Advanced Search Topics: economics, health insurance, personal satisfaction, medical economics “Recent years have witnessed a sharp upsurge of interest in the economics of health”(N Engl J Med 1968;279:190-5). In the spirit of transparency, “recent years” refers to the period around the start of Medicare. This statement was made by Victor Fuchs, Professor of Economics, at Stanford University in 1968 as he examined the growing demand for medical care. Textbooks on health economics typically begin with a discussion on the demand for health care, and despite different perspectives, economists and policymakers share a strong interest in understanding the factors behind the demand for health and medical care. In this first issue of “The Curious Economist.”, I discuss the demand for medical care based on early and foundational health economics literature. I end with a brief discussion of the demand for anesthesia services. In economics, demand refers to the willingness and ability to pay. It is the relationship between price... You do not currently have access to this content.

Objectives To examine (a) how changes in the price of medical care affected demand for different goods of daily use among people in the USA and (b) how changes in the price of medical care affected demand for basic necessities of life, namely food, housing and medical care for people belonging to different socioeconomic groups. Methods This study used out-of-pocket expenditure data from the Consumer Expenditure Survey (CES) and price data from the Consumer Price Index (CPI) during 1996–2005. The unit of analysis for this study was a consumer unit. Ordinary least-square regressions and Tobit regressions were used to perform analysis. Key findings Increases in the price of medical care caused a decrease in demand for most commodities used for daily living. As price of medical care increased, demand for medical care also decreased. Demand for medical care was price inelastic (coefficient of price elasticity, 0.72) with low positive income elasticity (0.13). Demand for food, housing and medical care was worst affected for poor people compared to people in middle- and higher-income groups due to the increased price of medical care. Demand for medical care increased across all income and ethnic groups with educational attainment. Conclusions Increases in the price of medical care could adversely affect the nutritional and housing status of poor people. If demand for medical care could act as a proxy for access to and availability of medical care, it could be inferred that poor people are most affected by the price increase. This study could prompt policy makers to provide more support to indigent people to improve access to medical care and to ensure adequate nutritional and housing needs.

This paper presents data on benefit distributions for physicians' services insured under a public universal medical care insurance plan in the Province of Saskatchewan, Canada. Characteristics of the distributions are discussed and their policy implications are examined. The conclusion is that mean dollar benefits are directly related to family income, while the relative variability of benefits is inversely related to family income. In addition, modest deductibles would have the effect of shifting a substantial proportion of program costs to beneficiaries. The temporal uncertainty of an individual's demand for medical care has long been recognized as the rationale for insurance arrangements in the health field. Recent consensus that health care is essential has given rise to the social ethic of a right to health care. Accordingly, some form of national health insurance is now a feature of the health care delivery system in most western countries. An important element in the evaluation of a public universal medical care insurance program is the extent to which it provides a vehicle for risk avoidance by certain soci -economic groups.

The social security system in Japan was greatly revolutionized when the long-term care insurance plan began in April 2000. Thus, Japan began the 21st century with two great social insurance plans, that is, medical care insurance and long-term care insurance. Each delivery system is divided: the medical care insurance plan is for the acute stage, and the long-term care is for the chronic stage. Both systems can be intended to cooperate to provide continuous care throughout life. The public health and welfare system has been trying hard to efficiently integrate the medical and long-term care insurance plans. However, it is necessary to establish a new insurance plan for ensuring the integrated adequacy of both insurance systems. One's life is destined to shift from medical care to long-term care at some point. As one ages or becomes disabled, it becomes difficult to lead an independent life with self-decision, and social support become necessary from third parties, instead of from the family or from one's own means. The society imposes the responsibility of payment of the medical and long-term care plan premiums on the individual throughout life. However, the structure of these insurance foundations should be combined under an integrated system, "Careworks", in order to also combine the concepts of length of life from the medicine and the respect of living from the long-term case to improve the social security of the life.

Health insurance and the demand for medical care

Several empirical studies provide evidence that their actual health state affects people's attitudes towards health and medical care in hypothetical health states. In the tradition of behavioural economics this paper considers the actual health state as a point of reference and builds a model for studying the implications of this phenomenon on health insurance and on demand for medical care. It considers the insurance demand of different types of agents: naive individuals, individuals who are able to commit to medical care demand and sophisticated individuals. Furthermore, it raises the question of whether inconsistency of preferences reinforces or tones down moral hazard problems.

Medical care is an input to the production of health. People get treatment for their health issues under western medicine , complementary and alternative medicine. Western medicine can be identified as the most famous and modern medical care system in the world. Complementary and alternative medicine refers to a variety of health practices as ayurveda, homeopathy, acupuncture, herbs, yoga, etc . Considering Sri Lankan context, with the rapid increase of ageing population, there is a growing trend in non communicable diseases. Most of people tend to use these two systems to recover from non communicable diseases as asthma, cholesterol, hypertension, arthritis, etc. The main objective of this study was to distinguish between the demand for alternative medicine and western medicine related to non communicable diseases. It was considered socio demographic and economic factors for demand in medical care for both sectors. Primary data was based on Arogya private hospital and Siddhayurvedini private ayurvedic care institution in Gampaha. It was selected 100 non communicable disease patients using systematic sampling method. Logistic regression model was mainly used to distinguish between the alternative and western medical care. According to the findings of this study, females are more likely to demand for both medical cares. Middle age, unemployed, arthritis patient and duration of disease 2-5 years cause to raise demand for alternative medical care. Diabetic patient, employed, believing health status as serious and having employer provided insurance cause to raise demand for western medical care. Relative to the demand for alternative medical care, living in rural area and lower educated people are negatively associated with demand for western medical care. KEYWORDS: Demand, Western, alternative, non communicable diseases

The reform of public hospitals is a complex process, involving multiple subsystems and the interaction of related factors. This paper conducts a preliminary evaluation of the joint reform of medication, medical care, and medical insurance in Sanming using quantitative and qualitative methodologies. The method of system dynamics is applied to model the three subsystems of medication, medical care, and medical insurance in Sanming and analyze the cause-and-effect relationship between different factors in the subsystem. Based on the analysis, the evaluation index is determined to evaluate the effect of the medical reform in Sanming. The analysis results show that Sanming’s public hospitals have experienced a comprehensive reform that includes changing the way pharmaceuticals are procured, cutting prescription prices, and raising hospital worker wages. To maximize the hospital revenue structure, the medical insurance payment system was changed. The expense of patient therapy was reduced, and the development of hierarchical diagnosis and treatment was encouraged.

Objectives : This study was designed to clarify population-social characteristics that influence the utilization patterns of hospitalized patients in a traditional korean hospital, thereby providing clinical data which would help further improvements of traditional korean medical service in particular the Acupuncture and Moxibustion. Methods : We investigated population-social characteristics and annual utilization patterns of all patients who were hospitalized for more than 24 hours in a Korean Medical Hospital from January 2005 to December 2014. The obtained data were recorded in the EMR chart and statistical analysis was performed using SPSS 21.0. Additionally, data from the patients admitted to the department of Acupuncture and Moxibustion were analyzed separately. Results : 1. All inpatients had a significant annual difference in age, gender, hospitalized department, and disease code annually but not in re-hospitalization number. Inpatients of the department of Acupuncture and Moxibustion also varied in their age, gender, and disease code annually, but not in re-hospitalization number. 2. Pearson correlation analysis on all inpatients showed that the mean days of hospital treatments had a negative correlation with all variables except medical care insurance. Total cost, cost per day per person and recuperation cost had a positive correlation with all variables except medical care insurance. There was no meaningful relationship between nonrecuperation cost and the variables. 3. Stepwise multiple regression analysis on all inpatients showed that the mean days of hospital treatments had a negative correlation with all variables except automobile insurance. The total hospitalization costs had a positive correlation with both general insurance and medical care insurance. Cost per day per person and recuperation cost had a positive correlation with the females. There was no meaningful relationship between non-recuperation cost and the variables. 4. Pearson correlation analysis on inpatients of the department of Acupuncture and Moxibustion inpatients showed that the mean days of hospital treatments had a positive correlation with all variables except general insurance and automobile insurance. Total cost and recuperation cost had a positive correlation with all variables except medical care insurance, and cost per day per person had a positive correlation with females and general insurance. There was no meaningful relationship between non-recuperation cost and the variables. 5. Stepwise multiple regression analysis on inpatients of the department of Acupuncture and Moxibustion inpatients, the mean days of hospital treatments, total cost, cost per day per person and recuperation cost had a positive correlation with general insurance. There was no meaningful relationship between non-recuperation cost and the variables. Conclusion : Population-social characteristics of inpatients annually varies, and the change influences the utilization pattern.

This article analyzes disease-specific moral hazard effects in the demand for physician office visits and explores whether optimal insurance for physician services should be designed to have disease-specific cost sharing. Generalized method of moments is implemented to address the endogeneity of private health insurance, and the nonnegativity and the discreteness of physician services use. The results indicate that the moral hazard effect varies considerably across disease-specific specialist care. The strongest moral hazard (for no-condition related specialist visits) is almost twice the moral hazard effect of the weakest (for chronic condition related specialist visits). Although the findings indicate some variation in the moral hazard effect across disease-specific general practitioner visits, the variation is less considerable. The main policy implication is that optimal insurance for physician services should be designed to have differential cost sharing based on disease status rather than to have uniform cost sharing. (ProQuest: ... denotes formulae omitted.) INTRODUCTION Private health insurance policies provide for a price reduction at the time the insured purchases medical care. Consequently, an insured individual would respond to the price decrease by purchasing more medical care than he would have purchased at the market price, ceteris paribus. This effect of insurance on medical care demand is known as the ex post moral hazard effect (Arrow, 1963; Pauly, 1968).1 It refers to the effect of insurance on the net price of medical care and to the consequent incentive effects on medical care consumption.2 This article analyzes disease-specific moral hazard effects (i.e., the effect of health insurance on the demand for medical care associated with similar disease states) in the demand for physician office visits. The article disaggregates speciahst and general practitioner visits into three disease-specific components and seeks to identify whether there is any variation in the magnitude of moral hazard across them. The outcome has implications for optimal health insurance design, in particular, whether health insurance for physician services should be designed to have differential cost sharing that depends on the respective demand characteristics of individual diseasespecific service categories. One contribution of this article is to the recent literature that analyzes disease-specific moral hazard effects.3 An individual's preferences toward physician care may vary by disease state, which suggests that physician services associated with different diseases may have different marginal benefit configurations; therefore, the price responsiveness of the individual-consumer physician care demand may vary by disease state. Consequently, the moral hazard effect may vary across physician services associated with different disease states, since if the individual-consumer demand for a physician service is less (highly) elastic, the extent of moral hazard would be lower (higher). Disease-specific physician services variables are constructed using the three-digit ICD-9-CM disease classification codes.4 Employing data from the Medical Expenditure Panel Survey, each specialist and general practitioner service category is classified in three groups: services associated with chronic conditions, services associated with acute conditions, and services that are not associated with any medical conditions. Another contribution of this article is to the health insurance design literature that emphasizes the state specificity of optimal insurance policies. The conventional theory of the demand for health insurance, which suggests that individuals buy insurance to achieve certainty with regard to the consumption of other goods, motivates diseasespecific cost sharing. According to this theory, although the risk avoidance aspect of insurance benefits consumers, it also creates a welfare loss, since the moral hazard consumption involves consumption of medical services whose value to the consumer is less than its cost of production (Pauly, 1968; Feldstein, 1973; Feldman and Dowd, 1991; Marining and Marquis, 1996). …

caGaGm ANAD A has had universal hospital insurance since 1961 S and universal medical care insurance since 1971. Medical care insurance was enacted: 1) as an inevitable consequence of universal hospital insurance, 2) because of its successfiul adoption in Saskatchewan, and 3) because the federal government accepted the recommendations of the 1964-1965 Royal Commission on Health Services (the Hall Commission) that it enact federal-provincial cost sharing for medical care insurance. In this paper we will examine the effect of universal medical care insurance on medical (and to a small extent nursing) manpower in Canada. We also will look at some of the current issues at the interface between governments and physicians. Although the analysis is national, health care in Canada is primarily a provincial responsibility and manpower policies are made at the provincial level. However, in the early days of universal medical insurance, federal contributions to the funding of medical education gave rise to a strong federal presence in medical manpower policy. Since the late 1970S, federal support of medical education and health care has decreased. With or without financial support of medical education at the federal level, medical manpower is a national resource in all of Canada except Quebec; licensure is donejointly by the nine anglophone provinces and movement of physicians among them is essentially unrestricted. In recommending universal medical care insurance in 1964-1965, the Hall Commission report made a number of assumptions (1): 1. The existing physician to population ratio of 1:857 was a minimum optimal ratio. This ratio had to be maintained or improved because of anticipated increased use due to unmet need and increased demand for services. 2. Population growth at existing rates would continue.

Dans cet article, publie pour la premiere fois dans le Quarterly Vol. 12, No 2, 1934, l'A. presente l'approche americaine de l'assurance sante, qu'il compare a l'approche europeenne, dont une premiere partie retrace les grandes etapes historiques (au Royaume-Uni et en Allemagne). L'arriere-plan historique de l'assurance maladie, telle qu'elle s'est developpee en Europe, est economique, son premier objectif ayant ete la protection du revenu, le remboursement des soins medicaux y etant un objectif second. Si l'experience europeenne est pleine d'enseignements, le cas des Etats-Unis necessite une approche differente, du fait que les couts des soins medicaux mettent desormais en jeu des sommes plus importantes et affectent bien plus de gens que ne le fait la perte de salaire due a la maladie, et aussi du fait que la provision d'un soin medical adequat, curatif et preventif, implique des possibilites plus importantes que dans l'ancien temps, pour soulager la souffrance, promouvoir la sante, augmenter l'efficacite economique. L'A. conclut ainsi son article par une serie de recommandations pour un systeme de sante plus stable, dans lequel les soins medicaux seraient pris en charge par l'assurance maladie, soutenue par l'impot.

In this survey of recent research in health economics, I concentrate on studies that have appeared since 1971 or are in progress. The survey reflects in part my own research interests and biases and is not meant to be comprehensive. Four topics are covered: (1) demand for adults' health and medical care; (2) effects of health on labor supply and wage rates; (3) demand for children's health and medical care and (4) selected topics pertaining to the supply side of the medical care market.

In this survey of recent research in health economics, I concentrate on studies that have appeared since 1971 or are in progress. The survey reflects in part my own research interests and biases and is not meant to be comprehensive. Four topics are covered: (1) demand for adults' health and medical care; (2) effects of health on labor supply and wage rates; (3) demand for children's health and medical care and (4) selected topics pertaining to the supply side of the medical care market.

1 Introduction.- Outline of the Book.- 2 Insurance, Social Relations, Moral Community, and the Cost of Medical Care.- Insurance and Social Relations.- Pooled Interdependence and Social Control.- Primitive Societies.- Mutual-Aid Societies in Europe.- Mutual-Aid Societies Among American Ethnic Groups.- Health Insurance and Expenditures for Medical Care in Japan.- Cultural Values and Behavior Patterns.- Kinship Organization.- Number of Physicians and Organization of Medical Care.- Private and Public Insurance.- 3 Medical Care: Actual Effects and Public Perception.- The Historical Decline in Mortality Rates and III Health.- Cross-National Evidence.- The Special Case of Japan.- Is Curative Medicine Irrelevant?.- Contrary Evidence?.- Other Criteria for Assessing the Effectiveness of Medical Care.- Minor Ailments.- Medical Judgment as the Reason for Seeking Care.- Improvement in Role Functioning.- Stress and Anxiety Reduction.- Public Perception and Social Definition.- Conclusion.- 4 Health and Economie Factors in Health Insurance.- Health of the Population.- Economic Productivity and National Efficiency.- Economic Insecurity.- Insurance as Risk Reduction.- Conclusion.- 5 Cultural Factors in Health Insurance.- Medical Technology.- Moral Imperative of Medical Care as a Right.- Conclusion.- 6 Health Insurance and Institutionalizing Marginal Utility Decisions.- Health Insurance and Marginal Utility.- Institutionalizing Decisions to Purchase Medical Care.- Health Insurance as Ritual.- Medical and Economic Anxiety.- The Sacred, the Profane, and Moral Anxiety.- Conclusion.- 7 Health Insurance, Social Integration, and Social Cohesion.- Medical Care, Health Insurance, and Social Policy.- Provider-Patient Relations.- Class Structure.- Private Industry, Health Insurance, and Employee Morale.- Generations, Kinship Units, and the Family.- Social Policy and Social Exchange.- Conclusion.- 8 Economic Costs Versus Social Benefits of Health Insurance.- Moral Hazards, Social Control, and Social Cohesion.- Implications for Medicare and Social Security.- Conclusion.- 9 Health Insurance, Cost Containment, and Social Conflict: A Future Perspective.- Supply of Physicians.- Medical Technology.- Trends in Illness and Disability.- Public Attitudes and Perceptions.- Health Insurance: From Conflict Between Classes to Conflict Between Generations.- Social Security as the Source of Generational Conflict.- Social Relations Between Generations and Social Security.- The Elderly, Social Security, and the Social Control of Conflict.- Conclusion.