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

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Author Info
Friedrich Breyer

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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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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
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Handle: RePEc:diw:diwwpp:dp253

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Find related papers by JEL classification:
H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health

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.:

  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. [Downloadable!] (restricted)
  2. Breyer, Friedrich, 1995. "The Political Economy of Rationing in Social Health Insurance," Journal of Population Economics, Springer, vol. 8(2), pages 137-48, May.
  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. [Downloadable!] (restricted)
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  4. 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. [Downloadable!] (restricted)
  5. 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. [Downloadable!] (restricted)
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  6. 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. [Downloadable!] (restricted)
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  7. 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.
  8. 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. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  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.
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