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Public provision and cross-border health care

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Author Info

  • Granlund, David

    ()
    (Department of Economics, Umeå School of Business and Economics, Umeå University)

  • Wikström, Magnus

    ()
    (Department of Economics, Umeå School of Business and Economics, Umeå University)

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    Abstract

    We study how the optimal public provision of health care depends on whether or not individuals have an option to seek publicly financed treatment in other regions. We find that, relative to the first-best solution, the government has an incentive to over-provide health care to low-income individuals. When cross-border health care takes place, this incentive is solely explained by that over-provision facilitates redistribution. The reason why more health care facilitates redistribution is that high-ability individuals mimicking low-ability individuals benefit the least from health care when health and labor supply are complements. Without cross-border health care, higher demand for health care among high-income individuals also contributes to the over-provision given that high-income individuals do not work considerably less than low-income individuals and that the government cannot discriminate between the income groups by giving them different access to health care.

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    Bibliographic Info

    Paper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 867.

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    Length: 22 pages
    Date of creation: 16 Oct 2013
    Date of revision:
    Handle: RePEc:hhs:umnees:0867

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    Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
    Phone: 090 - 786 61 42
    Fax: 090 - 77 23 02
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    Web page: http://www.econ.umu.se/
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    Related research

    Keywords: Health expenditure; Income redistribution; Patient mobility; Public Provision; Waiting time;

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