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The Economics of a Two Tier Health System: A Fairer Medicare?

Author

Listed:
  • Patricia Apps
  • Ray Rees
  • Elizabeth Savage

Abstract

This paper analyses a recent proposal of the Australian Government to reform the existing Medicare system. It develops models of the physician’s behaviour and of a household’s demand for medical insurance under the proposed system, and then proceeds to characterise the equilibrium under the new proposals. It argues that those most likely to be made worse off are low income households with children, though a full evaluation of the effects of the proposal requires it to be analysed in a public finance framework.

Suggested Citation

  • Patricia Apps & Ray Rees & Elizabeth Savage, 2004. "The Economics of a Two Tier Health System: A Fairer Medicare?," CEPR Discussion Papers 478, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    • Handle: RePEc:auu:dpaper:478
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    File URL: https://www.cbe.anu.edu.au/researchpapers/CEPR/DP478.pdf
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    References listed on IDEAS

    as
    1. Strohmenger, R. & Wambach, A., 2000. "Adverse selection and categorical discrimination in the health insurance markets: the effects of genetic tests," Journal of Health Economics, Elsevier, vol. 19(2), pages 197-218, March.
    2. Michael Rothschild & Joseph Stiglitz, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 90(4), pages 629-649.
    3. Cutler, David M. & Zeckhauser, Richard J., 2000. "The anatomy of health insurance," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 11, pages 563-643, Elsevier.
    4. Elizabeth Savage & Glenn Jones, 2004. "An Analysis of the General Practice Access Scheme on GP Incomes, Bulk Billing and Consumer Copayments," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 37(1), pages 31-40, March.
    5. Michael Hoy, 1982. "Categorizing Risks in the Insurance Industry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 97(2), pages 321-336.
    6. Michael Hoy, 1984. "The Impact of Imperfectly Categorizing Risks on Income Inequality and Social Welfare," Canadian Journal of Economics, Canadian Economics Association, vol. 17(3), pages 557-568, August.
    7. Wilson, Charles, 1977. "A model of insurance markets with incomplete information," Journal of Economic Theory, Elsevier, vol. 16(2), pages 167-207, December.
    8. James Butler, 2003. "Adverse Selection, Genetic Testing and Life Insurance — Lessons from Health Insurance in Australia," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 10(1), pages 73-82.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    health care; government policy; medical insurance;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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