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Optimal quality, waits and charges in health insurance


  • Gravelle, Hugh
  • Siciliani, Luigi


We examine the role of quality and waiting time in health insurance when there is ex post moral hazard. Quality and waiting time provide additional instruments to control demand and potentially can improve the trade-off between optimal risk bearing and optimal consumption of health care. We show that optimal quality is lower than it would be in the absence of ex post moral hazard. But 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.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:jhecon:v:27:y:2008:i:3:p:663-674

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    References listed on IDEAS

    1. Barzel, Yoram, 1974. "A Theory of Rationing by Waiting," Journal of Law and Economics, University of Chicago Press, vol. 17(1), pages 73-95, April.
    2. Hoel, Michael & Saether, Erik Magnus, 2003. "Public health care with waiting time: the role of supplementary private health care," Journal of Health Economics, Elsevier, vol. 22(4), pages 599-616, July.
    3. Sam Bucovetsky, 1984. "On the Use of Distributional Waits," Canadian Journal of Economics, Canadian Economics Association, vol. 17(4), pages 699-717, November.
    4. Besley, Timothy J., 1988. "Optimal reimbursement health insurance and the theory of Ramsey taxation," Journal of Health Economics, Elsevier, vol. 7(4), pages 321-336, December.
    5. Besley, Timothy & Coate, Stephen, 1991. "Public Provision of Private Goods and the Redistribution of Income," American Economic Review, American Economic Association, vol. 81(4), pages 979-984, September.
    6. Maurice March & Fred Schroyen, 2005. "Can a Mixed Health Care System be Desirable on Equity Grounds?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(1), pages 1-23, March.
    7. 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.
    8. Jeremy Hurst & Luigi Siciliani, 2003. "Tackling Excessive Waiting Times for Elective Surgery: A Comparison of Policies in Twelve OECD Countries," OECD Health Working Papers 6, OECD Publishing.
    9. 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.
    10. Lindsay, Cotton M & Feigenbaum, Bernard, 1984. "Rationing by Waiting Lists," American Economic Review, American Economic Association, vol. 74(3), pages 404-417, June.
    11. Hugh Gravelle & Luigi Siciliani, 2007. "Optimal Waits and Charges in Health Insurance," Discussion Papers 07/02, Department of Economics, University of York.
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    Cited by:

    1. Vincenzo Rebba & Dino Rizzi, 2011. "Waiting Times and Cost Sharing for a Public Health Care Service with a Private Alternative: A Multi-agent Approach," Working Papers 2011_18, Department of Economics, University of Venice "Ca' Foscari".
    2. 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.
    3. Mark Stabile & Sarah Thomson, 2014. "The Changing Role of Government in Financing Health Care: An International Perspective," Journal of Economic Literature, American Economic Association, vol. 52(2), pages 480-518, June.
    4. Dixon, Huw & Siciliani, Luigi, 2009. "Waiting-time targets in the healthcare sector: How long are we waiting?," Journal of Health Economics, Elsevier, vol. 28(6), pages 1081-1098, December.
    5. Fiorio, Carlo V. & Siciliani, Luigi, 2010. "Co-payments and the demand for pharmaceuticals: Evidence from Italy," Economic Modelling, Elsevier, vol. 27(4), pages 835-841, July.
    6. Moscelli, Giuseppe & Siciliani, Luigi & Tonei, Valentina, 2016. "Do waiting times affect health outcomes? Evidence from coronary bypass," Social Science & Medicine, Elsevier, vol. 161(C), pages 151-159.
    7. Sharma, Anurag & Siciliani, Luigi & Harris, Anthony, 2013. "Waiting times and socioeconomic status: Does sample selection matter?," Economic Modelling, Elsevier, vol. 33(C), pages 659-667.
    8. Huw Dixon & Luigi Siciliani, 2009. "Waiting Time Targets in Healthcare Markets: How Long Are We Waiting?," Discussion Papers 09/05, Department of Economics, University of York.
    9. 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.
    10. Kathrin Roll & Tom Stargardt & Jonas Schreyögg, 2012. "Effect of Type of Insurance and Income on Waiting Time for Outpatient Care," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 37(4), pages 609-632, October.
    11. Laura Levaggi & Rosella Levaggi, 2016. "Welfare analysis of rationing in health care provision," Working papers 39, Società Italiana di Economia Pubblica.
    12. Luigi Siciliani & Rossella Verzulli, 2009. "Waiting times and socioeconomic status among elderly Europeans: evidence from SHARE," Health Economics, John Wiley & Sons, Ltd., vol. 18(11), pages 1295-1306.
    13. Alessandro Petretto, 2013. "On the Fuzzy Boundaries between Public and Private in Health-Care Organization and Funding Systems," Rivista di Politica Economica, SIPI Spa, issue 1, pages 327-370, January-M.
    14. Mario Pezzino, 2010. "Hospital competition when patients have different willingness to pay for quality," The School of Economics Discussion Paper Series 1014, Economics, The University of Manchester.
    15. Felder, Stefan, 2008. "To wait or to pay for medical treatment? Restraining ex-post moral hazard in health insurance," Journal of Health Economics, Elsevier, vol. 27(6), pages 1418-1422, December.
    16. repec:kap:ijhcfe:v:17:y:2017:i:2:d:10.1007_s10754-016-9209-1 is not listed on IDEAS

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