IDEAS home Printed from https://ideas.repec.org/p/een/camaaa/2019-05.html
   My bibliography  Save this paper

The dynamics of health care and growth: A model with physician in dual practice

Author

Listed:
  • Baris Alpaslan
  • King Yoong Lim
  • Yan Song

Abstract

We present a growth model with micro-foundations of a mixed health care system and physician dual-practice, to analyze for welfare-optimal government financing strategy for a mixed health system in developing countries. Calibrating the model for Indonesia, we find that a government subsidy to private health care is both growth- and welfare-enhancing, whereas it is more effective for the government to invest in health infrastructure instead of a public-sector “rewarding” policy in raising government physicians’ wage if its goal is to improve physician effort in public practice. Indeed, for the “rewarding” policy, a dynamic trade-off in growth is found, which is not previously documented in the literature. We also find the model to produce two regimes with different welfare-optimal health financing (a “normal” regime and a low public-sector congestion regime). In the former, welfare-optimal health financing strategy appears to be promoting private health subsidy at the expense of public-sector physician wages. In the latter, the opposite is welfare-optimal.

Suggested Citation

  • Baris Alpaslan & King Yoong Lim & Yan Song, 2019. "The dynamics of health care and growth: A model with physician in dual practice," CAMA Working Papers 2019-05, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:camaaa:2019-05
    as

    Download full text from publisher

    File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2019-01/5_2019_alpaslan_lim_song_0.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Era Dabla-Norris & Jim Brumby & Annette Kyobe & Zac Mills & Chris Papageorgiou, 2012. "Investing in public investment: an index of public investment efficiency," Journal of Economic Growth, Springer, vol. 17(3), pages 235-266, September.
    2. Mariani, Fabio & Pérez-Barahona, Agustín & Raffin, Natacha, 2010. "Life expectancy and the environment," Journal of Economic Dynamics and Control, Elsevier, vol. 34(4), pages 798-815, April.
    3. Aswicahyono, Haryo & Narjok, Dionisius, 2011. "Indonesian Industrialization," WIDER Working Paper Series 053, World Institute for Development Economic Research (UNU-WIDER).
    4. Rivera, Berta & Currais, Luis, 2004. "Public Health Capital and Productivity in the Spanish Regions: A Dynamic Panel Data Model," World Development, Elsevier, vol. 32(5), pages 871-885, May.
    5. Hartwig, Jochen, 2008. "What drives health care expenditure?--Baumol's model of 'unbalanced growth' revisited," Journal of Health Economics, Elsevier, vol. 27(3), pages 603-623, May.
    6. Agénor, Pierre-Richard & Canuto, Otaviano & da Silva, Luiz Pereira, 2014. "On gender and growth: The role of intergenerational health externalities and women's occupational constraints," Structural Change and Economic Dynamics, Elsevier, vol. 30(C), pages 132-147.
    7. Agénor, Pierre-Richard & Canuto, Otaviano, 2015. "Gender equality and economic growth in Brazil: A long-run analysis," Journal of Macroeconomics, Elsevier, vol. 43(C), pages 155-172.
    8. Shankha Chakraborty & Mausumi Das, 2005. "Mortality, Human Capital and Persistent Inequality," Journal of Economic Growth, Springer, vol. 10(2), pages 159-192, June.
    9. Havranek, Tomas & Horvath, Roman & Irsova, Zuzana & Rusnak, Marek, 2015. "Cross-country heterogeneity in intertemporal substitution," Journal of International Economics, Elsevier, vol. 96(1), pages 100-118.
    10. repec:bla:rdevec:v:22:y:2018:i:1:p:333-360 is not listed on IDEAS
    11. Osang, Thomas & Sarkar, Jayanta, 2008. "Endogenous mortality, human capital and economic growth," Journal of Macroeconomics, Elsevier, vol. 30(4), pages 1423-1445, December.
    12. Agenor, Pierre-Richard & Aizenman, Joshua, 1999. "Macroeconomic adjustment with segmented labor markets," Journal of Development Economics, Elsevier, vol. 58(2), pages 277-296, April.
    13. Kunze, Lars, 2014. "Life expectancy and economic growth," Journal of Macroeconomics, Elsevier, vol. 39(PA), pages 54-65.
    14. Humphrey, Charlotte & Russell, Jill, 2004. "Motivation and values of hospital consultants in south-east England who work in the national health service and do private practice," Social Science & Medicine, Elsevier, vol. 59(6), pages 1241-1250, September.
    15. Hartwig, Jochen, 2010. "Is health capital formation good for long-term economic growth? - Panel Granger-causality evidence for OECD countries," Journal of Macroeconomics, Elsevier, vol. 32(1), pages 314-325, March.
    16. McPake, Barbara & Hanson, Kara & Adam, Christopher, 2007. "Two-tier charging strategies in public hospitals: Implications for intra-hospital resource allocation and equity of access to hospital services," Journal of Health Economics, Elsevier, vol. 26(3), pages 447-462, May.
    17. Chakraborty, Shankha, 2004. "Endogenous lifetime and economic growth," Journal of Economic Theory, Elsevier, vol. 116(1), pages 119-137, May.
    18. repec:eee:jmacro:v:58:y:2018:i:c:p:19-38 is not listed on IDEAS
    19. Pierre‐Richard Agénor & Devrim Yilmaz, 2013. "Aid Allocation, Growth And Welfare With Productive Public Goods," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 18(2), pages 103-127, March.
    20. Barış Alpaslan & Abdilahi Ali, 2018. "The spillover effects of innovative ideas on human capital," Review of Development Economics, Wiley Blackwell, vol. 22(1), pages 333-360, February.
    21. Agénor, Pierre-Richard & Lim, King Yoong, 2018. "Unemployment, growth and welfare effects of labor market reforms," Journal of Macroeconomics, Elsevier, vol. 58(C), pages 19-38.
    22. Gary Biglaiser & Ching-to Albert Ma, 2007. "Moonlighting: public service and private practice," RAND Journal of Economics, RAND Corporation, vol. 38(4), pages 1113-1133, December.
    23. 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.
    24. 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.
    25. Gruen, Reinhold & Anwar, Raqibul & Begum, Tahmina & Killingsworth, James R. & Normand, Charles, 2002. "Dual job holding practitioners in Bangladesh: an exploration," Social Science & Medicine, Elsevier, vol. 54(2), pages 267-279, January.
    26. repec:cup:macdyn:v:22:y:2018:i:04:p:961-1000_00 is not listed on IDEAS
    27. repec:tcb:cebare:v:18:y:2018:i:1:p:13-27 is not listed on IDEAS
    28. Iversen, Tor, 1997. "The effect of a private sector on the waiting time in a national health service," Journal of Health Economics, Elsevier, vol. 16(4), pages 381-396, August.
    29. 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.
    30. Claudia Rokx & George Schieber & Ajay Tandon & Pandu Harimurti & Aparnaa Somanathan, 2009. "Health Financing in Indonesia : A Reform Road Map," World Bank Publications, The World Bank, number 2710, September.
    31. MARCHAND, Maurice & SCHROYEN, Fred, 2005. "Can a mixed health care system be desirable on equity grounds?," CORE Discussion Papers RP 1765, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    32. Eggleston, Karen & Bir, Anupa, 2006. "Physician dual practice," Health Policy, Elsevier, vol. 78(2-3), pages 157-166, October.
    33. Pedro R.D. Bom & Jenny E. Ligthart, 2014. "What Have We Learned From Three Decades Of Research On The Productivity Of Public Capital?," Journal of Economic Surveys, Wiley Blackwell, vol. 28(5), pages 889-916, December.
    34. Socha, Karolina Z. & Bech, Mickael, 2011. "Physician dual practice: A review of literature," Health Policy, Elsevier, vol. 102(1), pages 1-7, September.
    35. Blackburn, Keith & Cipriani, Giam Pietro, 2002. "A model of longevity, fertility and growth," Journal of Economic Dynamics and Control, Elsevier, vol. 26(2), pages 187-204, February.
    36. Kurt R. Brekke & Lars Sørgard, 2007. "Public versus private health care in a national health service," Health Economics, John Wiley & Sons, Ltd., vol. 16(6), pages 579-601.
    37. Bhattacharya, Joydeep & Qiao, Xue, 2005. "Public and Private Expenditures on Health in a Growth Model," Staff General Research Papers Archive 12378, Iowa State University, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Dual Practice; Economic Growth; Health Care Financing; Welfare;

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:een:camaaa:2019-05. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Cama Admin). General contact details of provider: http://edirc.repec.org/data/asanuau.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.