Some economic aspects of the demand for health services

The first section of the paper discusses some of the basic concepts that economists utilize when considering the demand for goods and services. These concepts are then applied in the development of alternative models of the demand for health and medical care services. Following the theoretical discussion, attention is focused on the empirical problems associated with estimating the demand for health and medical care. Such issues as the effect of health status on the demand for health services and the impact of provider influence on utilization are considered. A review of empirical research indicates that health service demand is inelastic with respect to price and income. The elasticity of the time price of health care (the price of waiting time and travel time) is low in an absolute sense but clearly important. Other research findings are also discussed. The demand for health insurance and its role is an overall health demand model is also considered. Among other things, health insurance both reduces the net price of medical care and stimulates additional demand for services.