Health insurance and the demand for medical care: evidence from a randomized experiment

Am Econ Rev. 1987 Jun;77(3):251-77.


We estimate how cost sharing, the portion of the bill the patient pays, affects the demand for medical services. The data come from a randomized experiment. A catastrophic insurance plan reduces expenditures 31 percent relative to zero out-of-pocket price. The price elasticity is approximately -0.2. We reject the hypothesis that less favorable coverage of outpatient services increases total expenditure (for example, by deterring preventive care or inducing hospitalization).

Publication types

  • Research Support, U.S. Gov't, Non-P.H.S.

MeSH terms

  • Analysis of Variance
  • Deductibles and Coinsurance*
  • Health Services Needs and Demand / economics*
  • Health Services Research / economics*
  • Health Status
  • Insurance, Health*
  • Insurance, Major Medical
  • Models, Theoretical
  • Random Allocation
  • Research Design
  • United States