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Public versus Private Health Care in a National Health Service

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  • Kurt R. Brekke
  • Lars Sørgard

Abstract

This paper studies the interaction between public and private health care provision in a National Health Service (NHS), with free public care and costly private care. The health authority decides whether or not to allow private provision and sets the public sector remuneration. The physicians allocate their time (effort) in the public and (if allowed) in the private sector based on the public wage income and the private sector profits. We show that allowing physician dual practice "crowds out" public provision, and results in lower overall health care provision. While the health authority can mitigate this effect by offering a higher wage, we find that a ban on dual practice is more efficient if private sector competition is weak and public and private care are sufficiently close substitutes. On the other hand, if private sector competition is sufficiently hard, a mixed system, with physician dual practice, is always preferable to a pure NHS system.

Suggested Citation

  • Kurt R. Brekke & Lars Sørgard, 2006. "Public versus Private Health Care in a National Health Service," CESifo Working Paper Series 1679, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_1679
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Elin Johanna Gudrun Hafsteinsdottir & Luigi Siciliani, 2010. "DRG prospective payment systems: refine or not refine?," Health Economics, John Wiley & Sons, Ltd., vol. 19(10), pages 1226-1239.
    2. Brekke, Kurt R. & Siciliani, Luigi & Straume, Odd Rune, 2008. "Competition and waiting times in hospital markets," Journal of Public Economics, Elsevier, vol. 92(7), pages 1607-1628, July.
    3. Paula González & Gabriel Montes-Rojas & Sarmistha Pal, 2017. "Dual Practice by Health Workers: Theory and Evidence from Indonesia," Working Papers 17.12, Universidad Pablo de Olavide, Department of Economics.
    4. Katherine Cuff & Jeremiath Hurley & Stuart Mestelman & Andrew Muller & Robert Nuscheler, 2007. "Public and Private Health Care Financing with Alternate Public Rationing," Department of Economics Working Papers 2007-07, McMaster University.
    5. Obrizan, Maksym, 2017. "Does EU membership prevent crowding out of public health care? Evidence from 28 transition countries," MPRA Paper 81708, University Library of Munich, Germany.
    6. Carine Milcent, 2017. "Premier bilan de la T2A sur la variabilité des coûts hospitaliers," PSE Working Papers halshs-01649554, HAL.
    7. Rune Stenbacka & Mihkel Tombak, 2014. "Optimal Co-Payment Policy In Health Care: Competition, Ownership Structure And Quality Provision," Working Papers 140004, Canadian Centre for Health Economics.
    8. González, Paula & Macho-Stadler, Inés, 2013. "A theoretical approach to dual practice regulations in the health sector," Journal of Health Economics, Elsevier, vol. 32(1), pages 66-87.
    9. McPake, Barbara & Russo, Giuliano & Tseng, Fu-Min, 2014. "How do dual practitioners divide their time? The cases of three African capital cities," Social Science & Medicine, Elsevier, vol. 122(C), pages 113-121.
    10. Carine Milcent, 2014. "Coût des soins hospitaliers : effet de la concurrence par la qualité," Working Papers halshs-01010327, HAL.
    11. Carine Milcent, 2015. "Tarification et variabilité des coûts hospitaliers : Le cas de l'infarctus du myocarde," PSE Working Papers halshs-01202684, HAL.
    12. repec:kap:jeczfn:v:123:y:2018:i:1:d:10.1007_s00712-017-0550-8 is not listed on IDEAS
    13. Ikuo Ishibashi & Noriaki Matsushima, 2012. "Should Public Sectors Be Complements of Private Sectors?," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 168(4), pages 712-730, December.
    14. Socha, Karolina & Bech, Mickael, 2011. "The relationship between dual practice and physicians’ work behaviour in the public hospitals: Results from the Danish survey," COHERE Working Paper 2011:1, University of Southern Denmark, COHERE - Centre of Health Economics Research.
    15. Socha, Karolina, 2010. "Physician dual practice and the public health care provision. Review of the literature," COHERE Working Paper 2010:4, University of Southern Denmark, COHERE - Centre of Health Economics Research.
    16. Josse Delfgaauw, 2007. "Dedicated Doctors: Public and Private Provision of Health Care with Altruistic Physicians," Tinbergen Institute Discussion Papers 07-010/1, Tinbergen Institute, revised 17 Sep 2007.
    17. Carine Milcent, 2014. "Coût des soins hospitaliers : effet de la concurrence par la qualité," PSE Working Papers halshs-01010327, HAL.
    18. Carine Milcent, 2015. "Tarification et variabilité des coûts hospitaliers : Le cas de l'infarctus du myocarde," Working Papers halshs-01202684, HAL.
    19. Socha, Karolina Z. & Bech, Mickael, 2011. "Physician dual practice: A review of literature," Health Policy, Elsevier, vol. 102(1), pages 1-7, September.

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    Keywords

    health care; mixed oligopoly; physician dual practice;

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