Degree Year


Document Type


Degree Name

Bachelor of Arts




David Cleeton


Insurance, Medicare, United States, Health care


The findings of this paper can briefly be summarized. Demand, as measured by hospital admissions rate, is inelastic. Demand, as measured by mean length of stay, is elastic. A given amount of public hospital insurance has a small, but significantly larger effect on demand, by either measure, than an equal amount of private hospital insurance. These estimates can then be applied to several topics. One such topic is the effect of the Reagan Administration's plan to alter the Medicare benefit payment system. A second application measures the welfare loss (Martin Feldstein's phrase) of "excess" hospital insurance coverage, and the gains which would occur if patients were forced to pay a larger share of total costs. Finally, suggestions are made regarding structural changes in private insurance contracts, and ways in which these proposed changes can alter incentives, and thus alleviate tile health care crisis which plagues America.

Chapter 2 is a brief history of private hospital insurance, Medicare, and Medicaid. Chapter 3 is a review of pertinent literature. Chapter 4 describes the methodology used. Chapter 5 enumerates the results. Chapter 6 offers interpretation of the results. Chapter 7 analyzes the implications of the results obtained. Chapter 8 concludes the paper.

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