Should the Coinsurance Rate Be Increased in the Case of the Common Cold? An Analysis Based on an Original Survey
Journal of Japanese and International Economics, Vol. 16, No. 3, September 2002
Posted: 4 Jun 2003
This article examines the choice of health care in Japan by patients suffering from the common cold. Original data were obtained from a survey conducted by the authors. Empirical results show that the price elasticity of demand for medical services is between 0.23 and 0.36. This estimated price elasticity suggests that if the new medical insurance reform plan were to increase the coinsurance rate by 10 percent both for those insured and their and dependants, national medical costs may be reduced by, at most, 43 billion yen (358 million US dollars); correspondingly, this could increase the demand for over-the-counter (OTC) medicine, at most, by 8.8 billion yen (73.3 million US dollars). This result implies that medical services and OTC medications are substitutes. Moreover, a tenfold increase in the provision of information on drugs could reduce national medical costs by 60 billion yen (500 million US dollars) at most, with a corresponding increase in the demand for OTC medications by about 6.9 billion yen (57.5 million U.S. dollars).
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