The production of health and the demand for health care in Finland

Abstract

A structural equation model of the determinants of health and of the demand for health care, treating health status as a latent variable, was developed using cross-sectional sample survey data representing the adult noninstitutionalized population ( n = 10,712) of Finland in 1987. Attention was paid to evaluating the relative effects of different factors affecting health and demand for health care in order to make generalizations for health policy. The maximum likelihood estimates of MIMIC (multiple indicators and multiple causes) models are presented. The results indicate the important role of lifestyle variables as health production factors, and stress the importance of decreasing smoking and reducing overweight as targets for health policy. Under the assumptions of the model, smoking and overweight also have considerable effects on health care utilization. The socioeconomic variables—income, education and occupation—seem to have almost equal impacts on health, although their separate direct effects are somewhat smaller than the effects of the two lifestyle factors. The results of demand for doctor visits and prescribed medicines stress factors such as time cost and the supply of doctors as important determinants of utilization, and confirm the fact that a significant portion of health utilization depends on doctors decisions and is generated by patient-doctor contacts.