Numerous studies are reviewed that relate the demand for medical care services to variation in out-of-pocket payments. Medical care services include physician, hospital, dentist, and drugs. For all these services demand increases as out-of-pocket payments fall, but the exact magnitude of the response is somewhat uncertain. Although some believe that eliminating out-of-pocket payments for ambulatory services decreases hospitalization and decreases overall costs, the preponderance of evidence suggests the contrary. Evidence from the Medicare and Medicaid programs and from Canada supports the hypothesis that demand responds to variation in out-of-pocket payments.
This report is part of the RAND Corporation Paper series. The paper was a product of the RAND Corporation from 1948 to 2003 that captured speeches, memorials, and derivative research, usually prepared on authors' own time and meant to be the scholarly or scientific contribution of individual authors to their professional fields. Papers were less formal than reports and did not require rigorous peer review.
This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit www.rand.org/pubs/permissions.
The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.