An Experimental Investigation of Mixed Systems of Public and Private Health Care Finance
AbstractThis paper presents the results of a revealed-choice experiment testing the theoretical predictions of a model of a mixed system of public and private finance. In the context of a mixed system of health care finance, we investigate behavioural responses to changing the public sector allocation rule (needs-based vs. random), the supply of health care resources, and the size of the public health care budget on the following outcomes: the equilibrium market price for health care resources, the number of individuals who purchase private insurance, the probability of health treatment in the public system for those without private insurance, the health status of individuals left untreated, and the incomes of individuals who receive treatment. Our findings are generally consistent with the predictions of the theoretical model, although individuals consistently exhibit greater willingnesses-to-pay for private insurance than predicted resulting in a larger than predicted amount of private insurance being purchased. A commonly used risk-aversion measure only partially explains this observed deviation. We also find that, relative to a system of public financing only, a mixed system of health care finance results in higher health care prices and sicker, poorer people being left untreated.
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 McMaster University in its series Department of Economics Working Papers with number 2012-02.
Length: 33 pages
Date of creation: Apr 2012
Date of revision:
Contact details of provider:
Postal: 1280 Main Street West, Hamilton, Ontario, L8S 4M4
Phone: (905) 525-9140 ext. 22765
Fax: (905) 521-8232
Web page: http://www.economics.mcmaster.ca/
More information through EDIRC
experiment; health care finance; public health care; rationing; needs-based allocation.;
Other versions of this item:
- Buckley, Neil J. & Cuff, Katherine & Hurley, Jeremiah & McLeod, Logan & Mestelman, Stuart & Cameron, David, 2012. "An experimental investigation of mixed systems of public and private health care finance," Journal of Economic Behavior & Organization, Elsevier, vol. 84(3), pages 713-729.
- I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-04-17 (All new papers)
- NEP-EXP-2012-04-17 (Experimental Economics)
- NEP-HEA-2012-04-17 (Health 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.:
- Heike Hennig-Schmidt & Reinhard Selten & Daniel Wiesen, 2011.
"How Payment Systems Affect Physicians' Provision Behaviour – An Experimental Investigation,"
Bonn Econ Discussion Papers
bgse03_2011, University of Bonn, Germany.
- Hennig-Schmidt, Heike & Selten, Reinhard & Wiesen, Daniel, 2011. "How payment systems affect physicians' provision behaviour--An experimental investigation," Journal of Health Economics, Elsevier, vol. 30(4), pages 637-646, July.
- Heike Hennig-Schmidt & Reinhard Selten & Daniel Wiesen, 2009. "How Payment Systems Affect Physicians´ Provision Behaviour – An Experimental Investigation," Bonn Econ Discussion Papers bgse29_2009, University of Bonn, Germany.
- Christoph Schwierz & Achim Wübker & Ansgar Wübker & Björn Kuchinke, 2011. "Discrimination in waiting times by insurance type and financial soundness of German acute care hospitals," The European Journal of Health Economics, Springer, vol. 12(5), pages 405-416, October.
- Loewenstein, George, 1999. "Experimental Economics from the Vantage-Point of Behavioural Economics," Economic Journal, Royal Economic Society, vol. 109(453), pages F23-34, February.
- Fan, Chinn-Ping & Chen, Kong-Pin & Kan, Kamhon, 1998. "The design of payment systems for physicians under global budget - an experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 34(2), pages 295-311, February.
- San Miguel, Fernando & Ryan, Mandy & Scott, Anthony, 2002. "Are preferences stable? The case of health care," Journal of Economic Behavior & Organization, Elsevier, vol. 48(1), pages 1-14, May.
- Neil J. Buckley & Katherine Cuff & Jeremiah Hurley & Logan McLeod & Robert Nuscheler & David Cameron, 2012.
"Willingness-to-pay for parallel private health insurance: evidence from a laboratory experiment,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 45(1), pages 137-166, February.
- Neil Buckley & Katherine Cuff & Jeremiah Hurley & Logan McLeod & Robert Nuscheler & David Cameron, 2010. "Willingness-to-Pay for Parallel Private Health Insurance: Evidence from Laboratory Experiment," Centre for Health Economics and Policy Analysis Working Paper Series 2010-02, Centre for Health Economics and Policy Analysis (CHEPA), McMaster University, Hamilton, Canada.
- Chang, Fwu-Ranq, 1996. "Uncertainty and investment in health," Journal of Health Economics, Elsevier, vol. 15(3), pages 369-376, June.
- Sandra Hopkins & Peter Zweifel, 2005. "The Australian Health Policy Changes of 1999 and 2000: An Evaluation," Applied Health Economics and Health Policy, Springer Healthcare | Adis, vol. 4(4), pages 229-238.
- Timothy N. Cason & Daniel Friedman, 1997. "Price Formation in Single Call Markets," Econometrica, Econometric Society, vol. 65(2), pages 311-346, March.
- Schram, Arthur & Sonnemans, Joep, 2011. "How individuals choose health insurance: An experimental analysis," European Economic Review, Elsevier, vol. 55(6), pages 799-819, August.
- Cason, Timothy N. & Plott, Charles R., 1996. "EPA's New Emissions Trading Mechanism: A Laboratory Evaluation," Journal of Environmental Economics and Management, Elsevier, vol. 30(2), pages 133-160, March.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
- Pizer, Steven D. & Prentice, Julia C., 2011. "Time is money: Outpatient waiting times and health insurance choices of elderly veterans in the United States," Journal of Health Economics, Elsevier, vol. 30(4), pages 626-636, July.
- Katherine Cuff & Jeremiah Hurley & Stuart Mestelman & Andrew Muller & Robert Nuscheler, 2012.
"Public and private health‐care financing with alternate public rationing rules,"
John Wiley & Sons, Ltd., vol. 21(2), pages 83-100, 02.
- 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.
- Johannesson, Magnus & Johansson, Per-Olov & Soderqvist, Tore, 1998.
"Time spent on waiting lists for medical care: an insurance approach,"
Journal of Health Economics,
Elsevier, vol. 17(5), pages 627-644, October.
- Johannesson, Magnus & Johansson, Per-Olov & Söderqvist, Tore, 1997. "Time Spent on Waiting Lists for Medical Care: An Insurance Approach," Working Paper Series in Economics and Finance 192, Stockholm School of Economics.
- Wijkander, Hans, 1988. "Equity and Efficiency in Public Sector Pricing: A Case for Stochastic Rationing," Econometrica, Econometric Society, vol. 56(6), pages 1455-65, November.
- Louviere, Jordan J. & Lancsar, Emily, 2009. "Choice experiments in health: the good, the bad, the ugly and toward a brighter future," Health Economics, Policy and Law, Cambridge University Press, vol. 4(04), pages 527-546, October.
- 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.
- Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
- Colm Harmon & Brian Nolan, 2001. "Health insurance and health services utilization in Ireland," Health Economics, John Wiley & Sons, Ltd., vol. 10(2), pages 135-145.
- Mireia Jofre-Bonet, 2000. "Public health care and private insurance demand: The waiting time as a link," Health Care Management Science, Springer, vol. 3(1), pages 51-71, January.
- Smith, Vernon L, et al, 1982. "Competitive Market Institutions: Double Auctions vs. Sealed Bid-Offer Auctions," American Economic Review, American Economic Association, vol. 72(1), pages 58-77, March.
- Meliyanni Johar & Glenn Jones & Michael Keane & Elizabeth Savage & Olena Stavrunova, 2011. "Waiting times for elective surgery and the decision to buy private health insurance," Health Economics, John Wiley & Sons, Ltd., vol. 20(S1), pages 68-86, 09.
- 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.
- Guidon Fenig & Mariya Mileva & Luba Petersen, 2013. "Asset Trading and Monetary Policy in Production Economies," Discussion Papers dp13-08, Department of Economics, Simon Fraser University.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.