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Ramsey Waits: Allocating Public Health Service Resources when there is Rationing by Waiting

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  • Hugh Gravelle
  • Luigi Siciliani

Abstract

The optimal allocation of a public health care budget across treatments must take account of the way in which care is rationed within treatments since this will affect their marginal value. We investigate the optimal allocation rules for health care systems where user charges are fixed and care is rationed by waiting. The optimal waiting time is higher for treatments with demands more elastic to waiting time, higher costs, lower charges, smaller marginal welfare loss from waiting by treated patients, and smaller marginal welfare losses from under-consumption of care. The results hold for a wide range of welfarist and non-welfarist objective functions and for systems in which there is also a private health care sector. They imply that allocation rules based purely on cost effectiveness ratios are suboptimal because they assume that there is no rationing within treatments.

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Bibliographic Info

Paper provided by Department of Economics, University of York in its series Discussion Papers with number 07/15.

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Date of creation: Jun 2007
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Handle: RePEc:yor:yorken:07/15

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Web page: http://www.york.ac.uk/economics/
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Keywords: Waiting times; prioritisation; rationing; cost effectiveness ratios;

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References

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  1. Culyer, A J, 1989. "The Normative Economics of Health Care Finance and Provision," Oxford Review of Economic Policy, Oxford University Press, vol. 5(1), pages 34-58, Spring.
  2. 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.
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  8. Olivella, Pau, 2003. "Shifting public-health-sector waiting lists to the private sector," European Journal of Political Economy, Elsevier, vol. 19(1), pages 103-132, March.
  9. Hugh Gravelle & Peter Smith & Ana Xavier, 2003. "Performance signals in the public sector: the case of health care," Oxford Economic Papers, Oxford University Press, vol. 55(1), pages 81-103, January.
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  26. repec:rus:hseeco:122140 is not listed on IDEAS
  27. Gravelle, Hugh & Dusheiko, Mark & Sutton, Matthew, 2002. "The demand for elective surgery in a public system: time and money prices in the UK National Health Service," Journal of Health Economics, Elsevier, vol. 21(3), pages 423-449, May.
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Citations

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Cited by:
  1. Hugh Gravelle & Luigi Siciliani, 2007. "Third degree waiting time discrimination: optimal allocation of a public sector health care treatment under rationing by waiting," Discussion Papers 07/22, Department of Economics, University of York.
  2. 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.
  3. Ching-to Albert MA & Simona Grassi, 2010. "Optimal public rationing and price response," Boston University - Department of Economics - Working Papers Series WP2010-024, Boston University - Department of Economics.
  4. Laudicella, Mauro & Siciliani, Luigi & Cookson, Richard, 2012. "Waiting times and socioeconomic status: Evidence from England," Social Science & Medicine, Elsevier, vol. 74(9), pages 1331-1341.
  5. Januleviciute, Jurgita & Askildsen, Jan Erik & Holmås, Tor Helge & Kaarbøe, Oddvar & Sutton, Matt, 2010. "The Impact of Different Prioritisation Policies on Waiting Times: A Comparative Analysis of Norway and Scotland," Working Papers in Economics 07/10, University of Bergen, Department of Economics.
  6. Silviya Nikolova; & Arthur Sinko; & Matt Sutton;, 2012. "Do maximum waiting times guarantees change clinical priorities? A Conditional Density Estimation approach," Health, Econometrics and Data Group (HEDG) Working Papers 12/07, HEDG, c/o Department of Economics, University of York.

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