4.) Demand for health Flashcards
How is healthcare demand estimated in a non randomised study?
Overestimated demand at low prices and underestimated demand at high prices because the people who face lower prices are the same ones who purchased generous insurance coverage and tend to need more services.
What is the copayment rate?
The fraction of the medical bill for which the patient is responsible. A cost sharing plan is one with a positive copayment rate, so that the costs are shared between the insured and the insurer.
What studies were conducted into the demand for healthcare and what were their findings?
The RAND Health Insurance Experiment (HIE) and the Oregon Medicaid Experiment were both randomised studies in which insurance status was randomly assigned and the effects of price observed. Both concluded health care is represented by a downward sloping demand curve, price does affect the demand for healthcare.
What is an outpatient?
A patient who does not require overnight care, most typically less severe conditions.
Are there differences in the demand for inpatient are outpatient care?
Expected that inpatient care would be less sensitive to price, however evidence suggests although slightly less sensitive than outpatient care it is not that different. The demand is still somewhat dependent on price.
Which areas of health care are price sensitive/insensitive?
Sensitive: Inpatient and ER
Insensitive: Outpatient, mental, dental, antibiotics, paediatric
How does price affect demand for healthcare?
If free at point of service people will demand more, if not free they will demand less. This is particularly problematic for those most vulnerable (ill, poor, elderly)
Outline the Grossman Model for demand?
U=U(H,Z) health and composite good. Time spend working, playing, improving health or being ill. Inputs of H and Z are market goods and personal time. Subject to a budget constraint. Productive time is time spent not being ill, this increases if health increases.
How is the Grossman Model extended for multiple periods?
Include a discount factor, delta, as future health has a lower value than current health. Health considered a capital good, with a rate of depreciation, gamma. Diminishing marginal returns to health.
What data does the Grossman model support?
There is better health among the educated and health declines amongst the ageing.
Why does the optimal level of health change over time?
As people get older the cost of health as an investment rising, representing a movement along the MEC curve to a point of lower health.
