We present a model of political competition, in a multi-dimensional policy space and with policy-oriented candidates, to analyze the problem of health care finance. In our model, health care is either financed publicly (by means of general taxation) or privately (by means of a copayment). The extent of these two components (as well as the overall tax schedule) is the outcome of the process of political competition. Our results highlight, from a political-economy perspective, the key role of technological change in explaining the widely observed phenomenon, in advanced democracies, of a rising share of total economic resources spent on health.
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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number
2007031.
Find related papers by JEL classification: D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health