Cover: The Effects of Coinsurance on Demand for Physician Services

The Effects of Coinsurance on Demand for Physician Services

Published 1972

by Charles E. Phelps, Joseph P. Newhouse

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Analyzes effects of coinsurance on demand for physician services. In a natural experiment, the coverage of 2567 persons varied from full coverage in one year to 25 percent another year. Physician visits and expenditures declined by roughly 25 percent. Decline in ancillary services, while statistically significant, was only about half as great. Usage of different groups of individuals varied inversely with their assumed prices of time. The hypothesis that there was an equal absolute decline in visits and expenditures among all individuals cannot be rejected. It is possible, however, that utilization is a function of both a money price and a time price, and that the time price is lower for female dependents.

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