Theoretical considerations suggest that nonlinear health care price schedules have heterogeneous effects on health care demand. In this paper, we develop and apply a finite mixture bivariate probit model to analyze whether there are heterogeneous reactions to the introduction of a nonlinear...

One of the most important controversies in health economics concerns the question whether the imminent aging of the population in most OECD countries will place an additional burden on the tax payers who finance public health care systems. Proponents of the “red-herring hypothesis” argue...