Factors Affecting Health Care Demand

According to Michel Grossman, consumers have a demand for health for two reasons:

1.Health is a consumption commodity. It makes the consumers feel better.

2.Health is an investment commodity -- a state of health will determine the amount of time available to the consumer for productivity. (Feldstein, Health Care Economics, 2005)

Factors Affecting Health Care Demand:

Income. Higher-income families tend to have higher actual use of health services because they are able to afford the cost. But since they can also afford preventive care, they are able to reduce their real need for health services. This is the so-called double effect of income.

Heller (1976) found that for West Malaysia income was not a statistically significant determinant in

As net or out-of- pocket price falls, either because of increasing insurance coverage or because of the availability of subsidized care, demand becomes relatively more sensitive to changes in time price. Moreover, demand for free health services is expected to be more responsive to changes in time price than non-free services because time shares a greater proportion of the total price when availing of free facilities compared to non-free facilities (Acton

Distance has been the most studied hindrance to the use of health facility. The more distant a facility is from potential users, the less likely it is to be visited. (Ching, 1992)

A view of medical care demand being derived from the demand for health implies the following:

Increase in age result in an increase in the rate at which the person’s stock of health depreciates

Over the life cycle, people will attempt to offset part of the increased rate of depreciation in their stick of health by increasing their expenditure on health

The demand for medical care will increase with increases in person’s income. The higher their wage, the greater the value of an increase in the number of healthy days.

Education may have a negative effect on the demand for health care, because more highly educated people are presumed to be more efficient in producing health (Feldstein, Health Care Economics, 2005)

Patient’s demand for health care is essentially the demand for a treatment, the determinants of demand are his or her incidence of illness or need for care, a set of cultural demographic factors, and economic factors.

Patient factors:

Consumers must decide among the available alternatives designed to satisfy their desires for health care.

Weigh benefits against costs of a good or