Health insurance and physicians’ practice location choice: A natural experiment in Japan

Abstract

We examine how the large expansion of a medical subsidy program changes the behavior of primary care physicians. Since 2000, Japan, has seen a rapid development of a local subsidization program known as the Medical Subsidy for Children and Infants (MSCI), which substantially reduces out-of-pocket expenses for children’s healthcare utilization. Using a census of clinics from 1999 to 2011 matched with municipality-level eligibility criteria for the MSCI, we show that the MSCI increases the monthly number of visits per clinic. However, MSCI increased the likelihood that physicians would choose to open clinics in more densely populated areas, suggesting that expanding the generosity of the health insurance system may accelerate the concentration of physicians in urban centers.