TITLE
"Rising Health Care Expenditures: A Demand Side Analysis," Journal of Insurance Issues, Babu Nahata, Krzysztof Ostaszewski, and Prasanna Sahoo, Spring 2005, Vol. 28, No. 1, pp. 88-102. Full-text articles soon will be available through ABI/INFORM and EBSCO; click here for article PDF. 

ABSTRACT
In this paper we consider a utility-maximization model for health care. On
the basis of the equilibrium conditions derived for patients and the providers of the
medical service, we evaluate the importance of cost-sharing between the patients and
the third party and provide an explanation for the rising medical expenditures. We
effectively assume that some form of third-party payer is always involved in the health
care market and this involvement has significant consequences for the incentives of
both consumers and providers of health care. The proposed demand specification
explains why the empirical estimates of the price elasticity of demand for medical
services could exhibit a wide range. We analyze how medical insurance can result in
a market failure and evaluate ideas that can correct some of the distortions in resource
allocation for medical services. Some guidelines also emerge for a national health
insurance policy.

[Keywords: health savings accounts; national health insurance policy; health care demand].