Health Insurance Status and Physician-Induced Demand for Medical Services in Germany: New Evidence from Combined District and Individual Level Data

36 Pages Posted: 13 Feb 2008

See all articles by Hendrik Jürges

Hendrik Jürges

University of Mannheim - Mannheim Research Institute for the Economics of Aging (MEA); German Institute for Economic Research (DIW Berlin)

Date Written: March 2007

Abstract

Germany is one of the few OECD countries with a two-tier system of statutory and primary private health insurance. Both types of insurance provide fee-for-service insurance, but chargeable fees for identical services are more than twice as large for privately insured patients than for statutorily insured patients. This price variation creates incentives to induce demand primarily among the privately insured. Using German SOEP 2002 data, I analyze the effects of insurance status and district (Kreis-) level physician density on the individual number of doctor visits. The paper has four main findings. First, I find no evidence that physician density is endogenous. Second, conditional on health, privately insured patients are less likely to contact a physician but more frequently visit a doctor following a first contact. Third, physician density has a significant positive effect on the decision to contact a physician and on the frequency of doctor visits of patients insured in the statutory health care system, whereas, fourth, physician density has no effect on privately insured patients' decisions to contact a physician but an even stronger positive effect on the frequency of doctor visits than the statutorily insured. These findings give indirect evidence for the hypothesis that physicians induce demand among privately insured patients but not among statutorily insured.

Keywords: supplier-induced demand, health care utilization

JEL Classification: I11

Suggested Citation

Jürges, Hendrik, Health Insurance Status and Physician-Induced Demand for Medical Services in Germany: New Evidence from Combined District and Individual Level Data (March 2007). SOEP Paper No. 8. Available at SSRN: https://ssrn.com/abstract=1092811 or http://dx.doi.org/10.2139/ssrn.1092811

Hendrik Jürges (Contact Author)

University of Mannheim - Mannheim Research Institute for the Economics of Aging (MEA) ( email )

D-68131 Mannheim
Germany

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

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