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Measuring the Effects of Removing Subsidies for Private Insurance on Public Expenditure for Health Care

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  • Terence Chai Cheng

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

This paper investigates the effects of removing subsidies for private health insurance on public sector expenditure for hospital care. An econometric framework using simultaneous equation models is developed to analyse the interrelated decisions on the intensity and type of health care use and insurance. The results indicate that while privately insured individuals are more likely to seek hospital care as a private patient, they do not differ in their intensity of hospital care use compared with those without private insurance. The simulation results suggest that eliminating subsides could potentially yield substantial public sector savings.

Suggested Citation

  • Terence Chai Cheng, 2011. "Measuring the Effects of Removing Subsidies for Private Insurance on Public Expenditure for Health Care," Melbourne Institute Working Paper Series wp2011n26, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    • Handle: RePEc:iae:iaewps:wp2011n26
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    References listed on IDEAS

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    Cited by:

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    2. Marè, M.; & Porcelli, F.; & Vidoli, F.;, 2024. "Does private supply drive personal health choices? A spatial approach of health tax detractions at municipal level," Health, Econometrics and Data Group (HEDG) Working Papers 24/03, HEDG, c/o Department of Economics, University of York.
    3. Cheng, Terence Chai, 2014. "Measuring the effects of reducing subsidies for private insurance on public expenditure for health care," Journal of Health Economics, Elsevier, vol. 33(C), pages 159-179.
    4. Damien S. Eldridge & Ilke Onur & Malathi Velamuri, 2017. "The impact of private hospital insurance on the utilization of hospital care in Australia," Applied Economics, Taylor & Francis Journals, vol. 49(1), pages 78-95, January.
    5. Terence C. Cheng & Alfons Palangkaraya & Jongsay Yong, 2014. "Hospital utilization in mixed public--private system: evidence from Australian hospital data," Applied Economics, Taylor & Francis Journals, vol. 46(8), pages 859-870, March.
    6. Nathan Kettlewell, 2020. "Policy Choice and Product Bundling in a Complicated Health Insurance Market: Do People Get It Right?," Journal of Human Resources, University of Wisconsin Press, vol. 55(2), pages 566-610.

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    More about this item

    Keywords

    Demand for hospital care; private insurance; bivariate count data models; simultaneous equation models; policy simulation;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General

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