Concerns for Equity and the Optimal Co-Payments for Publicly Provided Health Care

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Concerns for Equity and the Optimal Co-Payments for Publicly Provided Health Care

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Michael Hoel ()

Abstract

In countries where health care is publicly provided and where equity considerations play an important role in policy decisions, it is often argued that an increase in co-payments is unacceptable as it will be particularly harmful to the less well-off in society. The present paper derives socially optimal co-payments in a simple model of health care where people differ in income and in severity of illness. The social optimum depends on the welfare weights given to persons with different levels of expected utility. Increased concern for equity may increase optimal co-payments for illnesses with homogeneous severity across the population. For illnesses where the severity varies strongly across the population, optimal co-payments go down as a response to increased concern for equity, provided income differences in the society are sufficiently small.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 1620.

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Date of creation: 2005
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Handle: RePEc:ces:ceswps:_1620

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Find related papers by JEL classification:
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

This paper has been announced in the following NEP Reports:

NEP-ALL-2005-12-20 (All new papers)
NEP-HEA-2005-12-20 (Health Economics)
NEP-PBE-2005-12-20 (Public Economics)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Ching-To Albert Ma & Michael H. Riordan, 2002. "Health Insurance, Moral Hazard, and Managed Care," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 11(1), pages 81-107, 03. [Downloadable!] (restricted)
Other versions:
- Ching-to Albert Ma & Michael Riordan, 1997. "Health Insurance, Moral Hazard, and Managed Care," Papers 0080, Boston University - Industry Studies Programme.
Shavell, Steven, 1979. "On Moral Hazard and Insurance," The Quarterly Journal of Economics, MIT Press, vol. 93(4), pages 541-62, November. [Downloadable!] (restricted)

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This page was last updated on 2009-12-1.

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