Question

Discuss what is known about price elasticities of demand for various health care services.

Answer 1

• Price Elasticity of demand for various health care services is relatively low.
• Preventive care and pharmacy benefits among medical services with large price elasticities.
• In case of preventive care,number of goods and services possibly serve as substitutes.
• When the price of care increases, consumers are able to replace away from preventive care towards goods and services.
• Preventive medical services are more as a luxury than a necessity..
• Benefits of preventive care in the long term are heavily discounted.
• Difference in elasticities may reflect the fact that preventive care and prescribed drugs are usually not well covered by insurance.
• There is growing attention to the responsiveness of demand for health plans..
• Change in the output of pocket costs of services or premium costs will have effect on the plan Individuals.
• Thus on the demand for health care services paid for by that plan.