The Effect of Time Price on the Demand for Medical-Care Services

Abstract

This paper analyzes the effect of time price on medical-care demand and describes use of a reservation-wage question from a household survey to develop a measure of time price for obtaining medical care. A comprehensive three-equation model of the demand for female medical-care services examines choice of provider, entry demand, and the demand for physician visits. Results show that provider choice is based primarily on economic factors and that an expected high time price discourages women from choosing a public provider and from seeking gynecological, maternal-health, or family-planning services during the year, yet does not influence the number of visits made once care is used. The estimated model shows that medical-care demand equations should control for the type of provider chosen and the opportunity cost of time for alternative activities when testing for a negative time price effect of obtaining medical care.

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