Economic Incentives and Hospitalization in Germany

The determinants of the dramatically rising expenditures on health care in general, and on hospital care in particular, have been of prior concern to policy and to research. Using a rich panel data set this paper contributes to this literature by investigating factors determining the demand for hospitalization in Germany. While most previous studies have found a significant impact of social insurance on the demand for hospital trips, the empirical results presented here cast doubts on the propelling role of those economic incentives in the German case. There are also important differences in the hospitalization behaviour of men and women and between the full sample and those who are chronically ill, which have been neglected by the literature. The analysis relies on various count data models including Poisson, NEGBIN, ZIP (/), hurdle Poisson and NEGBIN panel models, and the findings are rather robust.