Abstract

The Ghanaian National Health Insurance Scheme pays providers according to the fee for service payment scheme, a method of payment that is likely to encourage inducement of care. The goal of this paper is to test for the presence of supplier induced demand among patients who received care in private, for profit, hospitals accredited to provide care to insured patients. An instrumental variable Poisson estimation was used to compare the demand curves for health care by insured outpatients in the public and private hospitals. The results showed that supplier induced demand existed in the private sector among patients within the ages 18 and 60 years. Impact on cost of care and patients' welfare is discussed.