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Demand for private health insurance: how important is the quality gap?

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Author Info

  • Joan Costa
  • Jaume Garcia

    (Departament d'Economia i Empresa, Universitat Pompeu Fabra, Barcelona, Spain)

Abstract

Perceived quality of private and public health care, income and insurance premium are among the determinants of demand for private health insurance (PHI). In the context of a model in which individuals are expected utility maximizers, the non purchasing choice can result in consuming either public health care or private health care with full cost paid out-of-pocket. This paper empirically analyses the effect of the determinants of the demand for PHI on the probability of purchasing PHI by estimating a pseudo-structural model to deal with missing data and endogeneity issues. Our findings support the hypothesis that the demand for PHI is indeed driven by the quality gap between private and public health care. As expected, PHI is a normal good and a rise in the insurance premium reduces the probability of purchasing PHI albeit displaying price elasticities smaller than one in absolute value for different groups of individuals. Copyright © 2002 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.756
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 12 (2003)
Issue (Month): 7 ()
Pages: 587-599

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Handle: RePEc:wly:hlthec:v:12:y:2003:i:7:p:587-599

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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References

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Citations

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Cited by:
  1. Bünnings, Christian & Tauchmann, Harald, 2013. "Who opts out of the statutory health insurance? A discrete time hazard model for Germany," IWQW Discussion Paper Series 10/2013, Friedrich-Alexander-Universität Erlangen-Nürnberg, Institut für Wirtschaftspolitik und Quantitative Wirtschaftsforschung (IWQW).
  2. Massimo Baldini & Gilberto Turati, 2012. "Perceived quality of public services, liquidity constraints, and the demand of private specialist care," Empirical Economics, Springer, vol. 42(2), pages 487-511, April.
  3. Omar Paccagnella & Vincenzo Rebba & Guglielmo Weber, 2013. "VOLUNTARY PRIVATE HEALTH INSURANCE AMONG THE OVER 50s IN EUROPE," Health Economics, John Wiley & Sons, Ltd., vol. 22(3), pages 289-315, 03.
  4. Rodríguez Morilla, Carmen & Llanes Díaz-Salazar, Gaspar, 2005. "Estimación anual de matrices de contabilidad social usando el método de la mínima entropía: aplicación a la economía española del año 2000/Annual Estimation the Social Accounting Matrices Usin," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 23, pages 279-302, Abril.
  5. Guillem Lopez-Casasnovas & Joan Costa-Font & Ivan Planas, 2005. "Diversity and regional inequalities in the Spanish 'system of health care services'," Health Economics, John Wiley & Sons, Ltd., vol. 14(S1), pages S221-S235.
  6. Joan Costa-Font & Ana Rico, 2006. "Devolution and the Interregional Inequalities in Health and Healthcare in Spain," Regional Studies, Taylor & Francis Journals, vol. 40(8), pages 875-887.
  7. Guillem López & Joan Costa-Font & Ivan Planas, 2004. "Diversity and regional inequalities: Assessing the outcomes of the Spanish 'System of Health Care Services'," Working Papers, Research Center on Health and Economics 745, Department of Economics and Business, Universitat Pompeu Fabra.
  8. Ahmet Kara, 2013. "A low quality–high cost–low satisfaction trap in public health care: a model and an efficiency-quality-welfare improving stochastic resolution," Quality & Quantity: International Journal of Methodology, Springer, vol. 47(4), pages 2081-2093, June.
  9. Marisol Rodriguez & Alexandrina Stoyanova, 2008. "Changes in the demand for private medical insurance following a shift in tax incentives," Health Economics, John Wiley & Sons, Ltd., vol. 17(2), pages 185-202.
  10. Michel Grignon & Bidénam Kambia-Chopin, 2009. "Income and the Demand for Complementary Health Insurance in France," Working Papers DT24, IRDES institut for research and information in health economics, revised Apr 2009.
  11. Carme Saurina & Laura Vall-llosera & Marc Saez, 2012. "Factors determining access to and use of primary health care services in the Girona Health Region (Spain)," The European Journal of Health Economics, Springer, vol. 13(4), pages 419-427, August.
  12. Kiil, Astrid, 2012. "What characterises the privately insured in universal health care systems? A review of the empirical evidence," Health Policy, Elsevier, vol. 106(1), pages 60-75.
  13. Marisol Rodríguez & Alexandrina Stoyanova, 2006. "Changes in the demand for private medical insurance following a shift in tax incentives," Working Papers CREAP2006-12, Xarxa de Referència en Economia Aplicada (XREAP), revised Dec 2006.
  14. Joan Costa Font & Jordi Pons Novell, 2005. "Public Health Expenditure and Spatial Interactions in a Decentralized National Health System," Working Papers in Economics 139, Universitat de Barcelona. Espai de Recerca en Economia.
  15. Mou, Haizhen, 2013. "The political economy of the public–private mix in heath expenditure: An empirical review of thirteen OECD countries," Health Policy, Elsevier, vol. 113(3), pages 270-283.
  16. Eling, Martin & Pradhan, Shailee & Schmit, Joan T., 2013. "The Determinants of Microinsurance Demand," Working Papers on Finance 1308, University of St. Gallen, School of Finance.
  17. Meliyanni Johar & Glenn Jones & Michael Keane & Elizabeth Savage & Olena Stavrunova, 2010. "Waiting times and the decision to buy private health insurance. CHERE Working Paper 2010/9," Working Papers 2010/9, CHERE, University of Technology, Sydney.

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