1. TABLE 5–2 Price Elasticity of Demand for Health Care: Selected Studies (c) 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 1 Dependent variableStudyElasticityCountry Medical expendituresEichner (1998) Newhouse and the Insurance Experiment Group (1993) Phelps and Newhouse (1974) Rosett and Huang (1973) Van Vliet (2001) -0.62 to -0.75 -0.17 to -0.22 -0.04 to -0.12 -0.35 to -1.5 -0.079 United States Netherlands Hospital Care Admissions Hospital Inpatient Hospital Outpatient Manning et al. (1987) Davis and Russell (1972) Bhattacharya et al. (1996) -0.1 to -0.2 -0.32 to -0.46 -0.12 to -0.54 United States Japan Patient DaysFeldman and Dowd (1986)-0.74 to -0.80United States Physician VisitsCockx and Brasseur (2003)-0.13 to -0.03Belgium Total and Elective surgery Cromwell and Mitchell (1986)-0.14 and -0.17United States

2. TABLE 5–2 Price Elasticity of Demand for Health Care: Selected Studies (c) 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 2 Dependent variableStudyElasticityCountry Nursing home care Probability of entering a nursing home Number of patients Patient days Number of patients Headen (1993) Nyman (1989) Lamberton et al. (1986) Chiswick (1976) -0.7 -1.7 -0.76 -2.3 United States Dental ServicesManning and Phelps (1979) Mueller and Monheit (1988) -0.5 to -0.7 -0.18 United States Prescription Drugs Number Expenditures Smith (1993) Contoyannis et al. (2005) -.10 -0.12 to -0.16 United States Canada

3. The Impact of Insurance on the Demand for Medical Care RAND Health Insurance Study (HIS) (Manning et al., 1987) –Controlled experiment –Families from six sites –Various types of health insurance plans –Test: impact of differences in insurance coverage on the demand for medical care (c) 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 3

4. The Impact of Insurance on the Demand for Medical Care Results –As the level of coinsurance rises, or the out-of- pocket price of medical care increases Consumers demand less medical care –Consumers reduce medical expenditures largely by cutting back on the number of visits to health care providers and not on the amount spent on each visit –As the level of coinsurance increased The probability of using any medical services, along with total medical expenditures, diminished (c) 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 4

5. The Impact of Insurance on the Demand for Medical Care Results –Negative impact of deductibles on the consumption of medical care –Own-price elasticity of demand is sensitive to the level of insurance As the level of coinsurance drops, consumers become less sensitive to price changes due to lower out-of-pocket payments (c) 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 5

6. TABLE 5–3 Sample Means for Annual Use of Medical Care per Capita (c) 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use 6 Plan* Face-to-Face Visits Outpatient Expenses (1984 $) Inpatient Dollars (1984 $) Total Expenses (1984 $) Probability of Using Any Medical Services Free 25% 50% 95% Individual deductible 4.55 3.33 3.03 2.73 3.02 $340 260 224 203 235 $409 373 450 315 373 $749 634 674 518 608 86.8 78.8 77.2 67.7 72.3