: This study attempts to simultaneously model family insurance arrangement decisions and family health care demand among the married population. Spouses may choose to enroll with the same insurance policy, or they may join different plans. The main focus of this study is to determine if enrollment on different insurance plans significantly affects either spouse's health care demand. Data come from the Medical Expenditure Panel Survey. The sample consists of 2429 married couples. Parametric models are developed, and simulated maximum likelihood techniques are used to estimate parameters in a simultaneous equations model with a probit specification of insurance arrangement choice and negative binomial specifications of each spouse's health care demand. Family insurance arrangement choices and spousal health care demands are assumed to have common unobserved heterogeneity that captures the effect of self-selection into enrollment on different insurance plans. In addition, each spouse's utilization is assumed to have common unobserved family heterogeneity. Several different forms of health care utilization are considered: office-based physician visits, office-based non-physician visits, outpatient department provider visits, emergency room visits, and nights spent in a hospital.
