More Health Care Utilisation With More Insurance Coverage? Evidence from a Latent Class Model with German Data

We analyse the impact of optional deductibles, private supplementary health insurance and income on the demand for health care utilisation, measured as the number of physician visits with data from the German Socioeconomic Panel. With a set of newly available variables for the years 2002, 2004, and 2006 that measure individual health more accurately and including risk-attitudes towards health we find that possible endogeneity of the insurance choice is not a problem. A latent class approach that takes into account the panel structure of the data reveals that especially individuals who have few doctor visits, the low users, respond strongest to insurance status and income. In this group we find that more insurance increases the demand for physician visits and there is a pro-rich inequity in health care utilisation. No such effects are found for the high users.