Evidence on the impact of user costs on healthcare demand in ‘universal’ public National Health Services (NHS) is scarce. The changes in copayments and in the regulation of the provision of free patient transportation, introduced in early 2012 in Portugal, provide a natural experiment to evaluate that impact. However, those changes in user costs were accompanied with changes in the criteria that determine which patients are exempt from copayments, implying that simple comparisons of user rates would be biased.

In this paper, we develop a new methodology to evaluate the impact of increases in direct and indirect user costs on the demand for emergency services (ES) in the presence of compositional changes in co‐payment exempt and non‐exempt populations.

Our results show that the increase in copayments did not have an effect in moderating ES demand by paying users, but we find significant effects of the change in transport regulation. Thus, our results support the conclusion that indirect costs may be more important than direct costs in determining healthcare demand in NHS‐countries where copayments are small and wide exemption schemes are in place, especially for older patients. Copyright © 2015 John Wiley & Sons, Ltd.