Health Care, Insurance, and the Contract Choice Effect

7 Pages Posted: 5 Jun 2006

See all articles by Richard Dusansky

Richard Dusansky

University of Texas at Austin

Cagatay Koc

University of Texas at Arlington

Abstract

This article explores the interdependence between the individual consumer's demand for medical care and choice of health insurance coverage, with emphasis on its implications for demand behavior and empirical analysis. We show that an increase in the price of medical care has two effects on demand, the usual response of reduced quantity demanded and a health insurance contract choice effect resulting from the consumer's incentive to change insurance plan. The contract choice effect, widely neglected in studies of medical care demand, alters both the quantitative and qualitative predictive properties of the consumer's demand for medical services.

JEL Classification: D11, D81, I11

Suggested Citation

Dusansky, Richard and Koc, Cagatay, Health Care, Insurance, and the Contract Choice Effect. Economic Inquiry, Vol. 44, No. 1, pp. 121-127, 2006, Available at SSRN: https://ssrn.com/abstract=906370

Richard Dusansky (Contact Author)

University of Texas at Austin ( email )

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Cagatay Koc

University of Texas at Arlington ( email )

415 S West St Apt no 205
Arlington, TX 76013
United States
1-817-272-3383 (Phone)
1-817-272-3145 (Fax)

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