the HIE did not envision the emergence of many important influences on health care costs and
coverage—such as varied cost sharing for different medical services in health insurance plans
(e.g., lower cost sharing for preventive care and tiered formularies for prescription drugs), the
use of managed care techniques, and many other aspects of benefit design and management that
are common today.
In addition, there is no single reference point of elasticity estimates (like the ones measured
in the HIE) with respect to the demand for health insurance, either by employers, employees, or
individuals in the nongroup market. The range of elasticity estimates in the research literature
appears to support the notion that there is wide variation the estimated response to public policy
proposals that would alter the price of insurance to encourage greater coverage.
The Office of the Assistant Secretary for Planning and Evaluation (ASPE) is concerned
whether the HIE estimates or subsequent estimates of price and income elasticity accurately
reflect today’s health insurance and health care markets, and therefore are adequate to support
the development of public policy. A critical review of the research literature on consumer
responsiveness to the price of health insurance and services is an essential first step in appraising
This report reviews estimates of the price and income elasticities of demand for health
insurance and health care services in the research literature. The number of studies that have
estimated the elasticity of demand for health insurance and services products is very large. In
order to produce a manageable review, we restricted the studies included in this report using
The study produced estimates of the price or income elasticity of demand for health insurance and/or the demand for health care services, or it generated other estimates that are useful in understanding the responsiveness of demand to changes in price or income.