Price and Income Elasticities of Demand for Modern Health Care: The Case of Infant Delivery in the Philippines

The economic determinants of the demand for infant delivery services in the Cebu region of the Philippines are examined in this article. Although user charges can be a significant source of revenues to pay for maternal and child health services, important policy questions are whether charging for such services will significantly deter use, and how service quality can be improved. Price and income elasticities of the demand for types of services are computed, and simulations are carried out on the effects of different delivery service characteristics on the type of delivery method chosen. The results suggest that increasing the availability of modern public practitioners and facilities in rural areas, increasing the hours that health care facilities are open, making drugs available, and providing trained midwives for delivery will increase the use of modern delivery services. Perhaps the most important finding—which suggests an area for further investigation—is the apparent relative insensitivity of the choice of delivery service to changes in prices and household income in our model.