The effect of waiting times on demand and supply for elective surgery: Evidence from Italy

Waiting times are a major policy concern in publicly funded health systems across OECD countries. Economists have argued that, in the presence of excess demand, waiting times act as nonmonetary prices to bring demand for and supply of health care in equilibrium. Using administrative data disaggregated by region and surgical procedure over 2010-2014 in Italy, we estimate demand and supply elasticities with respect to waiting times. We employ linear regression models with first differences and instrumental variables to deal with endogeneity of waiting times. We find that demand is inelastic to waiting times while supply is more elastic. Estimates of demand elasticity are between -0.15 to -0.24. Our results have implications on the effectiveness of policies aimed at increasing supply and their ability to reduce waiting times.