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Care
5 6 Quantity of Physician
Services
Demand for Health Services
Health Insurance: Coinsurance
Price of
Physician Dwo: Demand without insurance
Services
Dwi: Demand with insurance
Dwi
Model by using market price
-Insurance makes her demand more
health care,
-makes demand less elastic: for the same
50 A increase in price will reduce demand less
with insurance.
.5*50
Dwo
5 6 Quantity of Physician
Services
Demand for Health Services
Health Insurance: Co Payment
Dwo $30
Dwi
60
5 Quantity of Physician
6
Services
Demand for Health Services
Health Insurance: Deductible
Purpose of deductible is to lower cost for
insurance company
1. Reduce administrative costs because lower
number of small claims.
2. May lower demand for medical care
– Depends on cost of the medical episode
• Small costs small problem may not demand health
care, big costs you are more likely to get the health
care.
Demand for Health Services
Health Insurance: Deductible Cont.
– Time when medical care is demanded
• If close to time when deductible is reset, may wait for
care
• If just after deductible has started more likely to have
care
– Probability of needing additional medical care in
the remainder of the deductible period.
• If know definitely will meet deductible, won’t wait to
go to doctor.
Demand for Health Services
Prices of Substitutes and Complements