From a health economics perspective, there are, in principle, two alternative views on the demand for health care. One suggestion is that the individual demands care as an input into her production of health (Grossman, 1972). This view – sometimes referred to as the Grossman model – suggests that the demand for health care is a derived demand in the process of investment in health capital. The Grossman model of the demand for health thus views health care as an input along with other health inputs such as nutrition and personal exercise. Specifically, the model views the individual as the sole decision maker as to if and how much health care to use. Over the past decade, however, the Grossman model of the demand for health has been challenged by a complementary view that sees the demand for health care within a principal-agent framework (Sarma, Simpson, 2006). In this view, the individual decides if and when to seek health care while the provider of the services decides how much care to use once the first decision has been taken. One of the criticisms of the Grossman model is the fact that many of its predictions are not supported by the empirical analyses. Depending on the particular view of the demand for health care that one adopts, the methods for analyzing the effect of for instance health insurance on the demand for care will vary. This is further discussed in the Methods section below. The role of insurance in health financing is twofold, one to raise revenues for health care services, and two, to pool these resources so that health risks can be effectively shared among the members of the insurance scheme (Folland, Goodman, Stano, 2004). Given the uncertainty with which ill health affects a given individual in the population, risk sharing is both an equitable and an effective way of financing health care. Indeed, important policy outcomes of health