How Price Responsive Is the Demand for Specialty Care?

Study Questions:

What is the patient response to a price change for specialty care, based on a co-payment increase from $15 to $50 per visit for veterans with hypertension?


A retrospective cohort of veterans required to pay co-payments was compared with veterans exempt from co-payments whose nonequivalence was reduced via propensity score matching. Specialty care expenditures in 2000–2003 were estimated via a two-part mixed model to account for the correlation of the use and level outcomes over time, and results from this correlated two-part model were compared with an uncorrelated two-part model and a correlated random intercept two-part mixed model.


A $35 specialty visit co-payment increase had no impact on the likelihood of seeking specialty care, but induced lower specialty expenditures over time among users who were required to pay co-payments. The log ratio of price responsiveness (semi-elasticity) for specialty care increased from −0.25 to −0.31 after the co-payment increase. Estimates were similar across the three models.


The authors concluded that a significant increase in specialty visit co-payments reduced specialty expenditures among patients obtaining medications at the Veterans Affairs medical centers.


Consistent with prior studies, this study shows that an increase in co-payment for specialty visits decreases specialty care use and expenditures. As fewer physicians choose primary care as a specialty, specialty physicians are likely to become a more common source of primary care over time. If co-payment trends for specialty care follow the Veterans Affairs example, access to this ‘hidden system of primary care’ may become more difficult for patients facing co-payments of the size currently faced by veterans seeking specialty care in the Veterans Affairs. Future studies should validate these findings in other insured populations to determine whether the price responsiveness of demand for specialty care estimated here generalizes beyond the Veterans Affairs and the downstream impact on health care outcomes.

Clinical Topics: Prevention, Hypertension

Keywords: Veterans, Health Expenditures, Hypertension

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