Related Experiment Videos
The demand for physician services. Evidence from a natural experiment
1Department of Economics, Place Montesquieu 3, B1348, Louvain-la-Neuve, Belgium. cockx@ires.ucl.ac.be
Journal of Health Economics
|November 8, 2003
Summary
Increased copayments for physician services had a small effect on demand, with price elasticity being low for both men and women. While substitution effects were significant, especially for women, the overall efficiency gain from the reform was modest.
Area of Science:
- Health Economics
- Public Health Policy
- Econometrics
Background:
- Healthcare copayments are a common policy tool to manage demand.
- Understanding the impact of copayment changes on healthcare utilization is crucial for effective policy design.
Purpose of the Study:
- To estimate the effect of copayment increases on the demand for physician services using a natural experiment in Belgium.
- To decompose the price effects into income and substitution effects.
Main Methods:
- Utilized a differences-in-differences (DD) estimator to analyze the impact of copayment reforms.
- Decomposed the overall price effect into income and substitution components.
Main Results:
- The price elasticity of a uniform proportional price increase was small (-0.13 for men, -0.03 for women).
- Substitution effects were substantial, particularly for women, though imprecisely estimated.
- The reform yielded modest efficiency gains despite significant price increases.
Conclusions:
- Copayment increases have a limited impact on the overall demand for physician services.
- Policy reforms should consider the nuanced effects of income and substitution, especially for different demographic groups.
- The efficiency gains from such reforms may be modest and require careful evaluation.