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Optimal quality, waits and charges in health insurance

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  • Gravelle, Hugh
  • Siciliani, Luigi

Abstract

We examine the role of quality and waiting time in health insurance when there is ex post moral hazard. Quality and waiting time provide additional instruments to control demand and potentially can improve the trade-off between optimal risk bearing and optimal consumption of health care. We show that optimal quality is lower than it would be in the absence of ex post moral hazard. But it is never optimal to have a positive waiting time if the marginal cost of waiting is higher for patients with greater benefits from health care.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 27 (2008)
Issue (Month): 3 (May)
Pages: 663-674

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Handle: RePEc:eee:jhecon:v:27:y:2008:i:3:p:663-674

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Web page: http://www.elsevier.com/locate/inca/505560

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  1. Hugh Gravelle & Luigi Siciliani, 2007. "Optimal Waits and Charges in Health Insurance," Discussion Papers 07/02, Department of Economics, University of York.
  2. Barzel, Yoram, 1974. "A Theory of Rationing by Waiting," Journal of Law and Economics, University of Chicago Press, vol. 17(1), pages 73-95, April.
  3. Gravelle, Hugh & Siciliani, Luigi, 2008. "Ramsey waits: Allocating public health service resources when there is rationing by waiting," Journal of Health Economics, Elsevier, vol. 27(5), pages 1143-1154, September.
  4. Lindsay, Cotton M & Feigenbaum, Bernard, 1984. "Rationing by Waiting Lists," American Economic Review, American Economic Association, vol. 74(3), pages 404-17, June.
  5. Besley, Timothy J., 1988. "Optimal reimbursement health insurance and the theory of Ramsey taxation," Journal of Health Economics, Elsevier, vol. 7(4), pages 321-336, December.
  6. Besley, Timothy & Coate, Stephen, 1991. "Public Provision of Private Goods and the Redistribution of Income," American Economic Review, American Economic Association, vol. 81(4), pages 979-84, September.
  7. Hoel, Michael & Saether, Erik Magnus, 2003. "Public health care with waiting time: the role of supplementary private health care," Journal of Health Economics, Elsevier, vol. 22(4), pages 599-616, July.
  8. Maurice March & Fred Schroyen, 2005. "Can a Mixed Health Care System be Desirable on Equity Grounds?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(1), pages 1-23, 03.
  9. Sam Bucovetsky, 1984. "On the Use of Distributional Waits," Canadian Journal of Economics, Canadian Economics Association, vol. 17(4), pages 699-717, November.
  10. Jeremy Hurst & Luigi Siciliani, 2003. "Tackling Excessive Waiting Times for Elective Surgery: A Comparison of Policies in Twelve OECD Countries," OECD Health Working Papers 6, OECD Publishing.
  11. Culyer, A J, 1989. "The Normative Economics of Health Care Finance and Provision," Oxford Review of Economic Policy, Oxford University Press, vol. 5(1), pages 34-58, Spring.
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Citations

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Cited by:
  1. A. Sharma; & L. Siciliani; & A. Harris ;, 2011. "Waiting times and socioeconomic status: does sample selection matter?," Health, Econometrics and Data Group (HEDG) Working Papers 11/22, HEDG, c/o Department of Economics, University of York.
  2. Roll, Kathrin & Stargardt, Tom & Schreyögg, Jonas, 2011. "Effect of type of insurance and income on waiting time for outpatient care," hche Research Papers 2011/03, Hamburg Center for Health Economics (hche), University of Hamburg.
  3. Vincenzo Rebba & Dino Rizzi, 2011. "Waiting Times and Cost Sharing for a Public Health Care Service with a Private Alternative: A Multi-agent Approach," Working Papers 2011_18, Department of Economics, University of Venice "Ca' Foscari".
  4. Hugh Gravelle & Luigi Siciliani, 2007. "Ramsey Waits: Allocating Public Health Service Resources when there is Rationing by Waiting," Discussion Papers 07/15, Department of Economics, University of York.
  5. Felder, Stefan, 2008. "To wait or to pay for medical treatment? Restraining ex-post moral hazard in health insurance," Journal of Health Economics, Elsevier, vol. 27(6), pages 1418-1422, December.
  6. Pizer, Steven D. & Prentice, Julia C., 2011. "Time is money: Outpatient waiting times and health insurance choices of elderly veterans in the United States," Journal of Health Economics, Elsevier, vol. 30(4), pages 626-636, July.
  7. Dixon, Huw & Siciliani, Luigi, 2009. "Waiting-time targets in the healthcare sector: How long are we waiting?," Journal of Health Economics, Elsevier, vol. 28(6), pages 1081-1098, December.
  8. Fiorio, Carlo V. & Siciliani, Luigi, 2010. "Co-payments and the demand for pharmaceuticals: Evidence from Italy," Economic Modelling, Elsevier, vol. 27(4), pages 835-841, July.
  9. Luigi Siciliani & Rossella Verzulli, 2009. "Waiting times and socioeconomic status among elderly Europeans: evidence from SHARE," Health Economics, John Wiley & Sons, Ltd., vol. 18(11), pages 1295-1306.

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