Opt Out or Top Up? Voluntary Healthcare Insurance and the Public vs. Private Substitution
AbstractWe investigate whether people enrolled into voluntary health insurance (VHI) substitute public consumption with private (opt out) or just enlarge their private consumption, without reducing reliance upon public provisions (top up). We study the case of Italy, where a mixed insurance system is in place. To this purpose, we specify a joint model for public and private specialist visits counts, and allow for different degrees of endogenous supplementary insurance coverage, looking at the insurance coverage as driven by a trinomial choice process. We disentangle the effect of income and wealth by going through two channels: the direct impact on the demand for healthcare and that due to selection into VHI. We find evidence of opting out: richer and wealthier individuals consume more private services and concomitantly reduce those services publicly provided through selection into for-profit VHI. These results imply that the market for VHI eases the redistribution from high income (doubly insured) individuals to low income (not doubly insured) ones operated by the Italian National Health Service (NHS). Accounting for VHI endogeneity in the joint model of the two counts is crucial to this conclusion.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. 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.
Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5952.
Length: 35 pages
Date of creation: Sep 2011
Date of revision:
Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Other versions of this item:
- D. Fabbri & C. Monfardini, 2011. "Opt Out Or Top Up? Voluntary Healthcare Insurance And The Public Vs. Private Substitution," Working Papers wp780, Dipartimento Scienze Economiche, Universita' di Bologna.
- D. Fabbri ; & C. Monfardini ;, 2011. "Opt Out Or Top Up? Voluntary Healthcare Insurance And The Public Vs. Private Substitution," Health, Econometrics and Data Group (HEDG) Working Papers 11/28, HEDG, c/o Department of Economics, University of York.
- C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
- C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-09-22 (All new papers)
- NEP-HEA-2011-09-22 (Health Economics)
- NEP-IAS-2011-09-22 (Insurance Economics)
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.:
- Winfried Pohlmeier & Volker Ulrich, 1995. "An Econometric Model of the Two-Part Decisionmaking Process in the Demand for Health Care," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 339-361.
- Chai Cheng, T; & Vahid, F;, 2010.
"Demand for hospital care and private health insurance in a mixed publicprivate system: empirical evidence using a simultaneous equation modeling approach,"
Health, Econometrics and Data Group (HEDG) Working Papers
10/25, HEDG, c/o Department of Economics, University of York.
- Terence Chai Cheng & Farshid Vahid, 2011. "Demand for Hospital Care and Private Health Insurance in a Mixed Public–Private System: Empirical Evidence Using a Simultaneous Equation Modeling Approach," Melbourne Institute Working Paper Series wp2011n22, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
- Katherine Cuff & Jeremiath Hurley & Stuart Mestelman & Andrew Muller & Robert Nuscheler, 2007. "Public and Private Health Care Financing with Alternate Public Rationing," Department of Economics Working Papers 2007-07, McMaster University.
- Daniele Fabbri & Chiara Monfardini, 2006.
"Rationing The Public Provision Of Healthcare In The Presence Of Private Supplements: Evidence From The Italian Nhs,"
CHILD Working Papers
wp21_06, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
- Fabbri, Daniele & Monfardini, Chiara, 2009. "Rationing the public provision of healthcare in the presence of private supplements: Evidence from the Italian NHS," Journal of Health Economics, Elsevier, vol. 28(2), pages 290-304, March.
- Daniele Fabbri & Chiara Monfardini, 2006. "Rationing the Public Provision of Health Care in the Presence of Private Supplements: Evidence from the Italian NHS," Health, Econometrics and Data Group (HEDG) Working Papers 06/14, HEDG, c/o Department of Economics, University of York.
- Tim Besley & John Hall & Ian Preston, 1996.
"The demand for private health insurance: do waiting lists matter?,"
IFS Working Papers
W96/07, Institute for Fiscal Studies.
- Besley, Timothy & Hall, John & Preston, Ian, 1999. "The demand for private health insurance: do waiting lists matter?," Journal of Public Economics, Elsevier, vol. 72(2), pages 155-181, May.
- Katherine Cuff & Jeremiah Hurley & Stuart Mestelman & Andrew Muller & Robert Nuscheler, 2007.
"Public and Private Health Care Financing with Alternate Public Rationing Rules,"
Centre for Health Economics and Policy Analysis Working Paper Series
2007-07, Centre for Health Economics and Policy Analysis (CHEPA), McMaster University, Hamilton, Canada.
- Katherine Cuff & Jeremiah Hurley & Stuart Mestelman & Andrew Muller & Robert Nuscheler, 2012. "Public and private health‐care financing with alternate public rationing rules," Health Economics, John Wiley & Sons, Ltd., vol. 21(2), pages 83-100, 02.
- Holly, Alberto & Gardiol, Lucien & Domenighetti, Gianfranco & Brigitte Bisig, 1998.
"An econometric model of health care utilization and health insurance in Switzerland,"
European Economic Review,
Elsevier, vol. 42(3-5), pages 513-522, May.
- Alberto HOLLY & Lucien GARDIOL & Gianfranco DOMENIGHETTI & Brigitte BISIG, 1998. "An Econometric Model of Health Care Utilization and Health Insurance in Switzerland," Cahiers de Recherches Economiques du DÃ©partement d'EconomÃ©trie et d'Economie politique (DEEP) 9803, Université de Lausanne, Faculté des HEC, DEEP.
- D. Fabbri & C. Monfardini, 2002.
"Public Vs. Private Health Care Services Demand in Italy,"
457, Dipartimento Scienze Economiche, Universita' di Bologna.
- Daniele Fabbri & Chiara Monfardini, 2003. "Public vs. Private Health Care Services Demand in Italy," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 62(1), pages 93-123, April.
- Besley, T. & Coate, S., 1989.
"Public Provision Of Private Goods And The Redistribution Of Income,"
36, Princeton, Woodrow Wilson School - Discussion Paper.
- 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.
- Munkin, Murat K. & Trivedi, Pravin K., 2008. "Bayesian analysis of the ordered probit model with endogenous selection," Journal of Econometrics, Elsevier, vol. 143(2), pages 334-348, April.
- Deb, Partha & Trivedi, Pravin K, 1997. "Demand for Medical Care by the Elderly: A Finite Mixture Approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(3), pages 313-36, May-June.
- Epple, Dennis & Romano, Richard E., 1996. "Ends against the middle: Determining public service provision when there are private alternatives," Journal of Public Economics, Elsevier, vol. 62(3), pages 297-325, November.
- Cameron, A C & P. K. Trivedi & Frank Milne & J. Piggott, 1988. "A Microeconometric Model of the Demand for Health Care and Health Insurance in Australia," Review of Economic Studies, Wiley Blackwell, vol. 55(1), pages 85-106, January.
- Thomas C. Buchmueller & Agnès Couffinhal & Michel Grignon & Marc Perronnin, 2004.
"Access to physician services: does supplemental insurance matter? Evidence from France,"
John Wiley & Sons, Ltd., vol. 13(7), pages 669-687.
- Thomas C. Buchmueller & Agnes Couffinhal & Michel Grignon & Marc Perronin, 2002. "Access to Physician Services: Does Supplemental Insurance Matter? Evidence from France," NBER Working Papers 9238, National Bureau of Economic Research, Inc.
- Schmitz, Hendrik, 2011. "Direct evidence of risk aversion as a source of advantageous selection in health insurance," Economics Letters, Elsevier, vol. 113(2), pages 180-182.
- Deb, Partha & Trivedi, Pravin K., 2002. "The structure of demand for health care: latent class versus two-part models," Journal of Health Economics, Elsevier, vol. 21(4), pages 601-625, July.
- Atella, Vincenzo & Deb, Partha, 2008. "Are primary care physicians, public and private sector specialists substitutes or complements? Evidence from a simultaneous equations model for count data," Journal of Health Economics, Elsevier, vol. 27(3), pages 770-785, May.
- Zimmer, David M. & Trivedi, Pravin K., 2006. "Using Trivariate Copulas to Model Sample Selection and Treatment Effects: Application to Family Health Care Demand," Journal of Business & Economic Statistics, American Statistical Association, vol. 24, pages 63-76, January.
- Bhat, Chandra R., 2001. "Quasi-random maximum simulated likelihood estimation of the mixed multinomial logit model," Transportation Research Part B: Methodological, Elsevier, vol. 35(7), pages 677-693, August.
- Srivastava, P & Zhao, X, 2008. "Impact of Private Health Insurance on the Choice of Public versus Private Hospital Services," Health, Econometrics and Data Group (HEDG) Working Papers 08/17, HEDG, c/o Department of Economics, University of York.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).
If references are entirely missing, you can add them using this form.