X hits on this document

409 views

0 shares

0 downloads

0 comments

62 / 98

used the 1989 National Long Term Care Survey to examine demand for nursing home services

among the elderly population. He found that income elasticity of demand for nursing home

services among private-pay patients and patients eligible for Medicaid was not significantly

different from zero.

At least two recent studies have attempted to estimate income elasticity by observing

differences in average income and health care spending across states or nations, and over a

longer time period (Dimatteo 2003, Freeman 2003). Both found that the income elasticity of

demand for health care was greater at higher levels of aggregation (e.g., national versus

individual expenditures), and also that the income elasticity of demand among consumers at low

income levels is greater than at high income levels.

C. SUMMARY

The consensus of the limited literature estimating the income elasticity of demand for either

health insurance or health services is that both are income-inelastic. However, because few

studies actually observe an exogenous change in consumers’ levels of income, nearly all studies

that estimate income elasticity are based on observational data. These studies suggest that as

income increases, the demand for health insurance and health services also increases, but the

magnitude of the increase is relatively small: the estimates of income elasticity are consistently

in the range of zero to 0.2 with respect to health care services, and zero to 0.1 with respect to

health

insurance.

Some

studies

that

have

estimated

income

elasticity

using

time-series

or

aggregated state- or country-level data have produced higher estimates of income elasticity—but

all in the range of 0.2 to 1.5.

(continued) and illustrates the importance of recognizing unobserved alternatives when considering estimates of income elasticity.

53

Document info
Document views409
Page views410
Page last viewedMon Nov 28 12:52:19 UTC 2016
Pages98
Paragraphs2978
Words29067

Comments