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Growth and welfare in mixed health system financing with physician dual practice in a developing economy: a case of Indonesia

Author

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  • Barış Alpaslan

    (Social Sciences University of Ankara
    ANU)

  • King Yoong Lim

    (Nottingham Trent University)

  • Yan Song

    (Nanjing Audit University)

Abstract

Based on Indonesia’s hybrid BPJS Kesehatan health system, we analyze for welfare-optimal government financing strategy in an economy with a mixed health system using an endogenous growth framework with physician dual practice. We find the model solution to produce two vastly different regimes in terms of policy implications: a “high” public-sector congestion regime as in the benchmark case of Indonesia, and a “low” public-sector congestion, high capacity regime. In the former, welfare-optimal health financing strategy appears to be promoting private health service. In contrast, in the low-congestion, high capacity regime, a welfare-optimal strategy is to do the opposite of increasing government physician wage at the expense of private health subsidy. These results highlight the importance of developing a benchmarking system that measures the actual degree of congestion faced by the public health service in a developing economy, as it ultimately would influence the optimal health financing strategy to be pursued.

Suggested Citation

  • Barış Alpaslan & King Yoong Lim & Yan Song, 2021. "Growth and welfare in mixed health system financing with physician dual practice in a developing economy: a case of Indonesia," International Journal of Health Economics and Management, Springer, vol. 21(1), pages 51-80, March.
  • Handle: RePEc:kap:ijhcfe:v:21:y:2021:i:1:d:10.1007_s10754-020-09289-9
    DOI: 10.1007/s10754-020-09289-9
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Chris Sampson’s journal round-up for 22nd March 2021
      by Chris Sampson in The Academic Health Economists' Blog on 2021-03-22 12:00:01

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    More about this item

    Keywords

    Dual practice; Economic growth; Health care financing; Welfare;
    All these keywords.

    JEL classification:

    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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