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This paper adapts a multinomial logit model to obtain the parameter estimates of demand with multiple choices for medical care services in the urban areas of Iran. The objective is to verify the effectiveness of the cost recovery policy by the Medical Services Insurance Organization of Iran. The results suggest that an out-of-pocket fee increase will not be conducive to the cost recovery and any increase in price would have a serious negative impact on the likelihood of healthcare utilization. Income appears to have a significant positive effect on the decision to seek medical care and the choice of facilities. Patients from wealthy families seem to seek more health care and prefer private facilities.