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Public Insurance, Private Insurance, And The Demand For Hospital Care: Implications For Medicare And Private Contracts, Martin Zelder

Honors Papers

The findings of this paper can briefly be summarized. Demand, as measured by hospital admissions rate, is inelastic. Demand, as measured by mean length of stay, is elastic. A given amount of public hospital insurance has a small, but significantly larger effect on demand, by either measure, than an equal amount of private hospital insurance. These estimates can then be applied to several topics. One such topic is the effect of the Reagan Administration's plan to alter the Medicare benefit payment system. A second application measures the welfare loss (Martin Feldstein's phrase) of "excess" hospital insurance coverage, and the gains …