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Income Redistribution and the Political Economy of Social Health Insurance : Comparing Germany and Switzerland

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  • Friedrich Breyer

Abstract

In many countries, collectively financed health insurance systems or health services delivery systems (such as the NHS) exist. Typically, these institutions are financed via general taxes or specific contributions levied on earnings. As benefits are not dependent upon income, this implies a redistribution from high to low earners. An exception can be found in Switzerland, where equal per-capita contributions are used. From a public-choice perspective it is natural to ask whether the combination of health insurance and income redistribution leads to an expansion or a contraction of the size of a public health care system, a question that is particularly relevant in view of the projected rapid increase of health care costs in the next decades due to population ageing and medical progress. Building upon the work of Gouveia (1997) and an earlier paper by the author (Breyer 1995) I use a simple model of direct democracy to analyze under what circumstances income redistribution tends to expand the size of a public health insurance system. The predictions of the model are confronted with existing evidence from Germany and Switzerland and are used to develop hypotheses on the future development of the systems.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.38651.de/dp253.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 253.

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Length: 12 p.
Date of creation: 2001
Date of revision:
Handle: RePEc:diw:diwwpp:dp253

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  1. Epple, Dennis & Romano, Richard E, 1996. "Public Provision of Private Goods," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 57-84, February.
  2. Friedrich Breyer & Andreas Haufler, 2000. "Health Care Reform: Separating Insurance from Income Redistribution," International Tax and Public Finance, Springer, vol. 7(4), pages 445-461, August.
  3. Gouveia, Miguel, 1997. " Majority Rule and the Public Provision of a Private Good," Public Choice, Springer, vol. 93(3-4), pages 221-44, December.
  4. Blomquist, Soren & Christiansen, Vidar, 1999. "The political economy of publicly provided private goods," Journal of Public Economics, Elsevier, vol. 73(1), pages 31-54, July.
  5. Eckstein, Zvi & Eichenbaum, Martin & Peled, Dan, 1985. "Uncertain lifetimes and the welfare enhancing properties of annuity markets and social security," Journal of Public Economics, Elsevier, vol. 26(3), pages 303-326, April.
  6. Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 630-49, November.
  7. Kifmann, Mathias, 2002. "Insuring Premium Risk in Competitive Health Insurance Markets," Beiträge zur Finanzwissenschaft, Mohr Siebeck, Tübingen, edition 1, volume 15, number urn:isbn:9783161477409.
  8. Breyer, Friedrich, 1995. "The Political Economy of Rationing in Social Health Insurance," Journal of Population Economics, Springer, vol. 8(2), pages 137-48, May.
  9. Friedrich Breyer & Volker Ulrich, 2000. "Gesundheitsausgaben, Alter und medizinischer Fortschritt: Eine Regressionsanalyse," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 220(1), pages 1-17.
  10. Besley, Timothy & Coate, Stephen, 1991. "Public Provision of Private Goods and the Redistribution of Income," American Economic Review, American Economic Association, vol. 81(4), pages 979-84, September.
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Cited by:
  1. Mathias Kifmann, 2002. "Die Finanzierung der Gesetzlichen Krankenversicherung durch Kopfbeiträge aus verfassungsökonomischer Sicht," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 71(4), pages 505-512.
  2. Siadat, Banafsheh & Stolpe, Michael, 2005. "Reforming health care finance: What can Germany learn from other countries?," Kiel Economic Policy Papers 5, Kiel Institute for the World Economy (IfW).
  3. Alena Kimakova, 2010. "A Political Economy Model of Health Insurance Policy," Atlantic Economic Journal, International Atlantic Economic Society, vol. 38(1), pages 23-36, March.

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