The Utilization of Outpatient Medical Services in Japan

We estimate the price elasticity of demand for outpatient care in Japan. We use a nationally representative microdata set consisting of nearly 440,000 Japanese patients. Using time between outpatient visits as a demand measure, we estimate a Cox proportional hazards model to calculate price effects. With predicted probabilities we simulate yearly utilization and obtain elasticity estimates. For most diagnostic categories, we obtain inelastic, downward sloping demand curves with price elasticities from -0.12 to -0.54. For the anomalous category we cannot reject a zero slope. The elasticity estimates for Japan are similar to U.S. estimates despite institutional differences