The demand for ambulatory mental health services from specialty providers

A two-part model is used to examine the demand for ambulatory mental health services in the specialty sector. In the first equation, the probability of having a mental health visit is estimated. In the second part of the model, variations in levels of use expressed in terms of visits and expenditures are examined in turn, with each of these equations conditional on positive utilization of mental health services. In the second part of the model, users are additionally grouped into those with and without out-of-pocket payment for services. This specification accounts for special characteristics regarding the utilization of ambulatory mental health services: (1) a large part of the population does not use these services; (2) of those who use services, the distribution of use is highly skewed; and (3) a large number of users have zero out-of-pocket expenditures. Cost-sharing does indeed matter in the demand for ambulatory mental health services from specialty providers; however, the decision to use mental health services is affected by the level of cost-sharing to a lesser degree than is the decision regarding the level of use of services. The results also show that price is only one of several important factors in determining the demand for services. The lack of significance of family income and of being female is notable. Evidence is presented for the existence of bandwagon effects. The importance of Medicaid in the probability of use equations is noted.