This paper examines how health care utilization among low-income children is affected by a reduction of the coinsurance rate, exploiting an institutional change in the Medical Subsidy for Children and Infants (MSCI) system, as a natural experiment. In 2004, the maximum age for MSCI recipients in Hokkaido Prefecture was raised from 3 years to include all children of preschool age. The implied arc price elasticity of outpatient care utilization is β0.23, which is congruent with the commonly cited value (β0.2) presented in the RAND health insurance experiment