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Public–private mix of health expenditure: A political economy and quantitative analysis

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  • Shuyun May Li
  • Solmaz Moslehi
  • Siew Ling Yew

Abstract

This paper constructs a simple model to examine decisions on public and private health spending under majority voting. In the model, agents with heterogeneous incomes choose how much to consume and spend on health care and vote for public health expenditure. The health status of an agent is determined by a CES composite of public and private health expenditure. The existence and uniqueness of the voting equilibrium are established. A quantitative exercise reveals the importance of the relative effectiveness of public and private health expenditure and their substitutability in determining the public‐private mix of health expenditure and in accounting for the observed differences across a sample of 22 advanced democratic countries. Le mélange public‐privé dans les dépenses en santé : économie politique et analyse quantitative. Ce texte construit un modèle simple pour examiner les décisions de dépenses publiques et privées en santé quand c’est le vote majoritaire qui décide. Dans ce modèle, les agents dont les revenus sont hétérogènes décident comment consommer et dépenser en santé, et votent pour les dépenses de santé publique. Le statut sanitaire d’un agent est déterminé par une fonction composite des dépenses publiques et privées en santé dans une fonction à élasticité de substitution constante. L’existence et l’unicité de l’équilibre du vote sont établies. Un exercice quantitatif révèle l’importance de l’efficacité relative des dépenses privées et publiques en santé et de leur substituabilité dans la détermination du mélange public‐privé des dépenses en santé, et dans l’explication des différences dans ce mélange d’un pays à l’autre dans l’échantillon de 22 pays démocratiques qui ont été étudiés.

Suggested Citation

  • Shuyun May Li & Solmaz Moslehi & Siew Ling Yew, 2016. "Public–private mix of health expenditure: A political economy and quantitative analysis," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(2), pages 834-866, May.
  • Handle: RePEc:wly:canjec:v:49:y:2016:i:2:p:834-866
    DOI: 10.1111/caje.12216
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