Differential use of health care in response to health shocks? (with Kees van Gool, Jane Hall and Chunzhou Mu {CHERE, University of Technology Sydney})

For many health conditions there is potential for health care services to substitute for one another.  This presents a possible explanation for previous research which finds  high income groups are greater users of specialists care, whereas lower income groups are greater users of primary care physicians or general practitioners (GPs), even after adjusting for health care needs.  Our primary aim is to investigate how utilization of primary care, specialist care and emergency department (ED) care (and the mix between the three) changes in response to a change in health need;  and to determine how this is impacted by socio-economic status.  Our panel data is derived from a large survey linked to multiple years of detailed administrative records that enables us to better control for individual heterogeneity and allow us to exploit changes in health related to the onset of two particular health shocks:  the onset of diabetes and heart disease.  We extend the analysis of utilization by examining patient out-of-pocket (OOP) costs following a health shock in order to provide a more complete investigation of horizontal equity.  We find substantial differences in the mix between primary care and specialist care use according to income and type of health shock but no evidence of using ED as a substitute for other care.  Our results indicate that low and high income patients navigate very different pathways for their care following onset of diabetes;  and to a lesser extent heart disease.  These pathways appear to be chosen on the basis of ability to pay, rather than the most effective or efficient bundle of care delivered through a combination of GP and specialist care.