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China’s medical savings accounts: an analysis of the price elasticity of demand for health care

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  • Hao Yu

    (RAND Corporation)

Abstract

Although medical savings accounts (MSAs) have drawn intensive attention across the world for their potential in cost control, there is limited evidence of their impact on the demand for health care. This paper is intended to fill that gap. First, we built up a dynamic model of a consumer’s problem of utility maximization in the presence of a nonlinear price schedule embedded in an MSA. Second, the model was implemented using data from a 2-year MSA pilot program in China. The estimated price elasticity under MSAs was between −0.42 and −0.58, i.e., higher than that reported in the literature. The relatively high price elasticity suggests that MSAs as an insurance feature may help control costs. However, the long-term effect of MSAs on health costs is subject to further analysis.

Suggested Citation

  • Hao Yu, 2017. "China’s medical savings accounts: an analysis of the price elasticity of demand for health care," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(6), pages 773-785, July.
    • Handle: RePEc:spr:eujhec:v:18:y:2017:i:6:d:10.1007_s10198-016-0827-9
    DOI: 10.1007/s10198-016-0827-9
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    Cited by:

    1. Wen He, 2022. "Effects of establishing a financing scheme for outpatient care on inpatient services: empirical evidence from a quasi-experiment in China," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 23(1), pages 7-22, February.

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    More about this item

    Keywords

    Medical savings accounts; Health insurance; Nonlinear price schedule; Elasticity; Demand for health care; China;
    All these keywords.

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • N35 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Asia including Middle East

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