%0 Report
%9 Working Paper
%A Acquatella, Angélique
%B TSE Working Paper
%C Toulouse
%D 2023
%F publications:48294
%I Université Toulouse  Capitole
%K income effects
%K health care demand elasticity
%K corner solution
%T The Demand Elasticity of Health Care Spending for Low-Income Individuals
%U https://publications.ut-capitole.fr/id/eprint/48294/
%V 23-1477
%X Low-income individuals are typically the most price sensitive segment of the mar-ket, but this is not true in the market for health care services. I show that low-income individuals have a smaller demand elasticity of medical spending with re-spect to coinsurance, relative to their higher income counterparts, using data from the RAND Health Insurance experiment. The null effect is driven by disproportion-ate share of low-income individuals who consume zero health care. The key insight is that low-income individuals may optimally consume zero health care because, when marginal utility of consumption is high, forgoing non-medical consumption becomes very costly.