The Demand for Medical Care: Evidence from Urban Areas in Bolivia

by Masako Ii

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Summary

This research analyzes the determinants of demand for medical services in urban areas of Bolivia. It also examines the possible trade-offs between cost recovery and the use of health services for different age, sex, ethnic, and income groups. The data used are from the third year of the Encuesta Integrada de Hogares (EIH), a multipurpose household survey conducted by the statistical office in Bolivia and the World Bank. The data are used to estimate a multinomial logit model, and a nested multinomial logit model (choice of medical facilities by patients). The main empirical result of this research is that the demand for medical care is responsive to changes in price, but price elasticities are, in general, very low. This finding is comparable to that of research for other countries. Moreover, the price elasticity of demand falls as income rises. For children, the price elasticities are lower than for adults. Price elasticities do not vary much by ethnic group or gender, but estimation results show that Aymara speakers (an Indian group) are more likely to care for themselves. Probably there are cultural barriers that prevent Aymara speakers from seeking formal care. The results also show that income and education are also important determinants of demand for medical care. For children, mother's education is far more influential than father's. Since price elasticities are so low, it suggests that there is potential for the Bolivian government to raise revenues by charging user fees. If additional revenues are not used to expand primary health care or to improve quality, imposing user charges on services may not substantially reduce inefficiency and/or inequity in the health sector.

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