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Institutional design and the closure of public facilities in transition economies

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  • William Jack

Abstract

As part of the reforms of their systems for financing and delivering health care, many transition economies, particularly in central and eastern Europe, have adopted national insurance funds that are institutionally separate from ministries of health. Most of these countries have also grappled with the problem of restructuring the delivery system, especially the need to reduce hospital capacity. Although improving the performance of medical care providers through a shift from passive budgeting to explicitly incentive mechanisms is important, why this change in financial relations between the government and providers could not be implemented simply by reforming the role of health ministries is not obvious. This paper presents an explicit rationale for the separation of powers between the regulator (the ministry of health) and the financing body (the insurance fund), based on the inability of a single agency to commit to closing hospitals. JEL classification: L51, P20, P35, I18.

Suggested Citation

  • William Jack, 2002. "Institutional design and the closure of public facilities in transition economies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(3), pages 619-635, November.
  • Handle: RePEc:bla:etrans:v:10:y:2002:i:3:p:619-635
    DOI: 10.1111/1468-0351.t01-1-00127
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    Cited by:

    1. Davide Infante & Janna Smirnova, 2010. "Market Failures within Poor Institutions: The Effects of Bureaucrats’ Rent-seeking Activity," Chapters, in: Neri Salvadori (ed.), Institutional and Social Dynamics of Growth and Distribution, chapter 5, Edward Elgar Publishing.
    2. Jack, William, 2005. "Purchasing health care services from providers with unknown altruism," Journal of Health Economics, Elsevier, vol. 24(1), pages 73-93, January.

    More about this item

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General
    • P35 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Public Finance
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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