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Optimal Waits and Charges in Health Insurance

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  • Hugh Gravelle
  • Luigi Siciliani

Abstract

Waiting times are commonly used in the health sector to ration demand. We show that when money charges (coinsurance rates) are optimally set and there are no redistributional considerations, it is never optimal to have a positive waiting time if the marginal cost of waiting is higher for patients with greater benefits from health care. Although waiting time provides an additional instrument to control demand it does not mitigate the conflict between efficient risk bearing and efficient consumption of health care.

Suggested Citation

  • Hugh Gravelle & Luigi Siciliani, 2007. "Optimal Waits and Charges in Health Insurance," Discussion Papers 07/02, Department of Economics, University of York.
    • Handle: RePEc:yor:yorken:07/02
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    Citations

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    Cited by:

    1. Hugh Gravelle & Luigi Siciliani, 2008. "Is waiting‐time prioritisation welfare improving?," Health Economics, John Wiley & Sons, Ltd., vol. 17(2), pages 167-184, February.
    2. Hugh Gravelle & Luigi Siciliani, 2009. "Third degree waiting time discrimination: optimal allocation of a public sector healthcare treatment under rationing by waiting," Health Economics, John Wiley & Sons, Ltd., vol. 18(8), pages 977-986, August.
    3. Gravelle, Hugh & Siciliani, Luigi, 2008. "Ramsey waits: Allocating public health service resources when there is rationing by waiting," Journal of Health Economics, Elsevier, vol. 27(5), pages 1143-1154, September.
    4. Gravelle, Hugh & Siciliani, Luigi, 2008. "Optimal quality, waits and charges in health insurance," Journal of Health Economics, Elsevier, vol. 27(3), pages 663-674, May.
    5. Jacco Thijssen, 2007. "Ramsey Waits: A Computational Study on General Equilibrium Pricing of Derivative Securities," Discussion Papers 07/16, Department of Economics, University of York.

    More about this item

    Keywords

    Waiting times; rationing; optimal pricing; insurance;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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