An Empirical Analysis of Medicare-Eligible Veterans' Demand for Outpatient Health Care Services

51 Pages Posted: 12 Jun 2002

See all articles by Kajal Lahiri

Kajal Lahiri

State University of New York (SUNY) at Albany, College of Arts and Sciences, Economics

Guibo Xing

SUNY at Albany, College of Arts and Sciences, Economics

Date Written: April 30, 2002

Abstract

Using data from the 1992 US National Survey of Veterans, we analyze Medicare-eligible veterans' use of VA and non-VA outpatient health care services. We apply a utility consistent, combined multinomial choice and count data model to identify factors that affect these veterans' outpatient health care usage and facility choices, with special reference to the effect of out-of-pocket cost, distance to the medical facility, and supplemental private medical insurance coverage. Our first stage count data regression shows that the out-of-pocket cost index calculated from the second stage multinomial choice model is significant in determining the Medicare-eligible veterans' demand of outpatient health care services. The calculated cost index elasticity of outpatient visits is about -0.65. In the second stage, we specify a multinomial choice model to study veterans' allocation of outpatient visits between VA and non-VA health care facilities, and we find that veterans' out-of-pocket cost and the distance to the health care facility have significantly negative effects on the probability of choosing the alternative. A number of other factors including family income, insurance status, means of transportation, home ownership, race, employment, health, disability status and diagnostic conditions were also found to be important at various stages of the decision making. We find no evidence of adverse selection in the market for supplemental private health insurance. The model is used to simulate the impact of alternative copayment policies on the demand for VA outpatient health care services.

National Survey of Veterans, Health Care Demand, Two Stage Count Data Model, Nested Logit, Copayments, Shadow Cost, Consumer Surplus, CBOCs

JEL Classification: I12, I28, C35

Suggested Citation

Lahiri, Kajal and Xing, Guibo, An Empirical Analysis of Medicare-Eligible Veterans' Demand for Outpatient Health Care Services (April 30, 2002). Available at SSRN: https://ssrn.com/abstract=313427 or http://dx.doi.org/10.2139/ssrn.313427

Kajal Lahiri (Contact Author)

State University of New York (SUNY) at Albany, College of Arts and Sciences, Economics ( email )

Department of Economics
1400 Washington Avenue
Albany, NY 12222
United States
518-442 4758 (Phone)
518-442 4736 (Fax)

HOME PAGE: http://www.albany.edu/~klahiri

Guibo Xing

SUNY at Albany, College of Arts and Sciences, Economics ( email )

1400 Washington Avenue
Albany, NY 12222
United States

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