Demand for Health Care When Time Prices Vary More Than Money Prices

by Jan Paul Acton

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A survey of users of New York Municipal Hospital Outpatient Departments was used to examine factors that determine demand for medical services. In particular, this study concentrates on nonmonetary factors that may be important as money prices fall (due to spreading health insurance or the enactment of National Health Insurance legislation). After developing predictions with a utility maximization model, a simultaneous equation system was specified such that the distance one travels to receive free ambulatory care is endogenous. The empirical results support the major predictions of the formal model. A number of suggestions are made for policymakers either at the federal or city level.

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