Katherin Cuff () (Department of Economics, McMaster University) Jeremiah Hurley (Department of Economics and Department of Clinical Epidemiology and Biostatistics, McMaster University) Stuart Mestelman Andrew Muller (Department of Economics, McMaster University) Robert Nuscheler (Department of Economics, University of Waterloo)
Additional information is available for the following
registered author(s):
We develop a model to analyze alternative health care financing arrangements. Health care is demanded by individuals varying in income and severity of illness. There is a limited supply of health care resources used to treat individuals, causing some individuals to go untreated. We examine outcomes under full public finance, full private finance, and mixed, parallel public and private finance under two rationing rules for the public sector: needs-based rationing and random rationing. Insurers (both public and private) must bid to obtain the necessary health care resources to treat their beneficiaries. While public insurer's ability-to-pay is limited by its (fixed) budget; the private insurers willingness-to-pay reflects the individuals' willingness-to-pay for care. When permitted, the private sector supplies supplementary health care to those willing and able to pay. We find that the introduction of a private sector diverts treatment from relatively poor to relatively rich individuals. Moreover, if the public system allocates care according to need, then the average severity of the untreated is higher in a mixed system than in a pure public system. While we can unambiguously sign most comparative static effects for a general set of distribution functions, an analysis of the relationship between public sector rationing and the scope for a private health insurance market requires distributional assumptions. For a bivariate uniform distribution function we find that the private health insurance market is smaller when the public sector rations according to need as compared to random allocation of health care.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Length: 41 pages Date of creation: 2007 Date of revision: Handle: RePEc:hpa:wpaper:200707
Contact details of provider: Postal: Faculty of Health Sciences, Mc Master University, 1200 Main Street West, Hamilton, Ontario, L8N 3Z5 Phone: (905) 525-9140, extension 22122 Fax: (905) 546-5211 Email: Web page: http://www.chepa.org/ More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (Gioia Buckley).
Find related papers by JEL classification: I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health