ABSTRACT
This article describes a discrete choice model for the demand for médical care, derived from a theoretical model that implies a natural interrelationship between price and income. The model is based on data from a 1984 household survey in Perú. In the context of the model, if health is a normal food, then the price elasticity of the demand for health care should decline as income increases. Unlike previous studies, the authors found that price plays a significant role in the demand for health care, and that demand becomes more elasticincome falls. This implies that user fees would refuce access to health care for the poor proportionaly more than for the rich. Possible frameworks were simuled for the impact of two different levels of fees on health care and welfare; it was shown that although user fees can generate substantial revenues for the health services, they would also produce a significant reduction in aggregate consumer welfare, to the detriment of the poor. Utilizing the frameworks, two specific cases were studied: in the first, persons in the bottom quintile of income were exempted from a fee increase, and in the second, the income generated by such an increase was used to construct more clinics and public hospitals. It was observed that when private physicians raised their prices proportionately to the increase, the frequency of visits of persons in the bottom quintile dropped