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An Experimental Investigation of Mixed Systems of Public and Private Health Care Finance

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  • Neil J. Buckley
  • Katherine Cuff
  • Jeremiah Hurley
  • Logan McLeod
  • Stuart Mestelman
  • David Cameron

Abstract

This paper presents the results of a revealed-choice experiment testing the theoretical predictions of a model of a mixed system of public and private finance. In the context of a mixed system of health care finance, we investigate behavioural responses to changing the public sector allocation rule (needs-based vs. random), the supply of health care resources, and the size of the public health care budget on the following outcomes: the equilibrium market price for health care resources, the number of individuals who purchase private insurance, the probability of health treatment in the public system for those without private insurance, the health status of individuals left untreated, and the incomes of individuals who receive treatment. Our findings are generally consistent with the predictions of the theoretical model, although individuals consistently exhibit greater willingnesses-to-pay for private insurance than predicted resulting in a larger than predicted amount of private insurance being purchased. A commonly used risk-aversion measure only partially explains this observed deviation. We also find that, relative to a system of public financing only, a mixed system of health care finance results in higher health care prices and sicker, poorer people being left untreated.

Suggested Citation

  • Neil J. Buckley & Katherine Cuff & Jeremiah Hurley & Logan McLeod & Stuart Mestelman & David Cameron, 2012. "An Experimental Investigation of Mixed Systems of Public and Private Health Care Finance," Department of Economics Working Papers 2012-02, McMaster University.
  • Handle: RePEc:mcm:deptwp:2012-02
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Brosig-Koch, Jeannette & Hennig-Schmidt, Heike & Kairies-Schwarz, Nadja & Wiesen, Daniel, 2016. "Using artefactual field and lab experiments to investigate how fee-for-service and capitation affect medical service provision," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PB), pages 17-23.
    2. Brosig-Koch, Jeannette & Hennig-Schmidt, Heike & Kairies-Schwarz, Nadja & Wiesen, Daniel, 2015. "The Effects of Introducing Mixed Payment Systems for Physicians – Experimental Evidence," Ruhr Economic Papers 543, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    3. Huck, Steffen & Lünser, Gabriele & Spitzer, Florian & Tyran, Jean-Robert, 2016. "Medical insurance and free choice of physician shape patient overtreatment: A laboratory experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PB), pages 78-105.
    4. Nathan Kettlewell, 2016. "Policy Choice and Product Bundling in a Complicated Health Insurance Market: Do People get it Right?," Discussion Papers 2016-16, School of Economics, The University of New South Wales.
    5. Castro, M.F.; & Ferrara, P.; & Guccio, C.; & Lisi, D.;, 2018. "Medical Malpractice Liability and Physicians’ Behavior:Experimental Evidence," Health, Econometrics and Data Group (HEDG) Working Papers 18/11, HEDG, c/o Department of Economics, University of York.
    6. Hennig-Schmidt, Heike & Wiesen, Daniel, 2014. "Other-regarding behavior and motivation in health care provision: An experiment with medical and non-medical students," Social Science & Medicine, Elsevier, vol. 108(C), pages 156-165.
    7. repec:eee:jeborg:v:137:y:2017:i:c:p:374-397 is not listed on IDEAS
    8. Jeannette Brosig-Koch & Heike Hennig-Schmidt & Nadja Kairies-Schwarz & Daniel Wiesen, 2015. "The Effects of Introducing Mixed Payment Systems for Physicians – Experimental Evidence," Ruhr Economic Papers 0543, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    9. Guidon Fenig & Mariya Mileva & Luba Petersen, 2013. "Asset Trading and Monetary Policy in Production Economies," Discussion Papers dp13-08, Department of Economics, Simon Fraser University, revised Aug 2014.
    10. Norma Burow & Miriam Beblo & Denis Beninger & Melanie Schröder, 2017. "Why Do Women Favor Same-Gender Competition? Evidence from a Choice Experiment," Discussion Papers of DIW Berlin 1662, DIW Berlin, German Institute for Economic Research.
    11. Alejandro Arrieta & Ariadna García-Prado & Paula González & Jose Luis Pinto-Prades, 2016. "Risk Attitudes in Medical Decisions for Others: An Experimental Approach," Working Papers 16.07, Universidad Pablo de Olavide, Department of Economics.
    12. 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.
    13. repec:zbw:rwirep:0543 is not listed on IDEAS

    More about this item

    Keywords

    experiment; health care finance; public health care; rationing; needs-based allocation.;

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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