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Demand for private health insurance: Is there a quality gap?

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  • Joan Costa
  • Jaume Garcia

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Abstract

Quality of care is qualified as a main determinant of the demand for voluntary private health insurance (PHI) in National Health Systems (NHS). This paper provides new evidence on the influence of the quality gap between public and private health insurance and other demand determinants in the demand for PHI in Catalonia. The demand for PHI is modelled as a demand for health care quality. Unlike previous studies, the database employed allows for the development of a link between the theoretical and the empirical model dealing with unobserved heterogeneity and endogeneity issues. Results suggest that a rise in PHI quality enhances an equivalent influence in the demand for PHI as an equal reduction of NHS quality. Income and price elasticity estimates are consistent with the observed feature that PHI appears to be a luxury good and individuals tend to be relatively insensible to tax relief's and monetary co-payments in insurance contracts.

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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 531.

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Date of creation: Feb 2001
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Handle: RePEc:upf:upfgen:531

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Web page: http://www.econ.upf.edu/

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Keywords: Private health insurance; health care quality; insurance premium;

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References

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  7. 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.
  8. Iversen, Tor, 1997. "The effect of a private sector on the waiting time in a national health service," Journal of Health Economics, Elsevier, Elsevier, vol. 16(4), pages 381-396, August.
  9. Besley, Timothy & Hall, John & Preston, Ian, 1998. "Private and public health insurance in the UK," European Economic Review, Elsevier, Elsevier, vol. 42(3-5), pages 491-497, May.
  10. Martin, Stephen & Smith, Peter C., 1999. "Rationing by waiting lists: an empirical investigation," Journal of Public Economics, Elsevier, Elsevier, vol. 71(1), pages 141-164, January.
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  12. Besley, T. & Coate, S., 1989. "Public Provision Of Private Goods And The Redistribution Of Income," Papers, Princeton, Woodrow Wilson School - Discussion Paper 36, Princeton, Woodrow Wilson School - Discussion Paper.
  13. Propper, Carol, 1993. "Constrained choice sets in the U.K. demand for private medical insurance," Journal of Public Economics, Elsevier, Elsevier, vol. 51(3), pages 287-307, July.
  14. Epple, Dennis & Romano, Richard E, 1996. "Public Provision of Private Goods," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 104(1), pages 57-84, February.
  15. Kenkel, Don, 1990. "Consumer Health Information and the Demand for Medical Care," The Review of Economics and Statistics, MIT Press, vol. 72(4), pages 587-95, November.
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  17. Van de Ven, Wynand P. M. M. & Van Praag, Bernard M. S., 1981. "The demand for deductibles in private health insurance : A probit model with sample selection," Journal of Econometrics, Elsevier, Elsevier, vol. 17(2), pages 229-252, November.
  18. Lindsay, Cotton M & Feigenbaum, Bernard, 1984. "Rationing by Waiting Lists," American Economic Review, American Economic Association, American Economic Association, vol. 74(3), pages 404-17, June.
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Cited by:
  1. López Nicolás, Ángel & Vera-Hernández, Marcos, 2008. "Are tax subsidies for private medical insurance self-financing? Evidence from a microsimulation model," Journal of Health Economics, Elsevier, Elsevier, vol. 27(5), pages 1285-1298, September.
  2. Ángel López-Nicolás & Marcos Vera-Hernández, 2002. "Are tax subsidies for private medical insurance self-financing? Evidence from a microsimulation model for outpatient and inpatient episodes," Working Papers, Research Center on Health and Economics, Department of Economics and Business, Universitat Pompeu Fabra 632, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2004.
  3. Makoka, Donald & Kaluwa, Ben & Kambewa, Patrick, 2007. "The Demand for Private Health Insurance in Malawi," MPRA Paper 4974, University Library of Munich, Germany.

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