Determinants of Inpatient Mental Health Use in a Heavily Insured Population

This paper estimates a model of the demand for hospital inpatient mental health services. It uses data on enrollees who were in the Blue Cross and Blue Shield Association Federal Health Benefits Plan from 1979 to 1981. The econometric analysis focuses on the impact of increased copayments and deductibles in the high-option plan. The results provide evidence that increases in outpatient copayments and deductibles reduce the utilization of both inpatient and outpatient mental health services. Of interest is the negative income elasticity of demand for hospital inpatient services and the positive association between the relative availability of mental health providers and the demand for mental health care.