IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Public-Private Mix of Health Expenditure: A Political Economy Approach and A Quantitative Exercise

Listed author(s):
  • Shuyun May Li, Solmaz Moslehi, Siew Ling Yew

This paper constructs a simple overlapping generations model to examine how the choice of public and private health expenditure is affected by preferences and economic factors under majority voting. In the model,agents with heterogeneous income decide how much to consume, save, and invest in private health care, and vote for the income tax to be used to finance public health. Agents survival probabilities are endogenously determined by a CES composite of public and private health expenditure. For the two special cases that public and private health are complements or perfect substitutes, we show that the voting equilibrium is unique and locally stable. For the general case, we calibrate the model to Canadian data to conduct a quantitative analysis.Our results suggest that the public-private mix of health expenditure is quite sensitive to the degree of substitutability between private and public health and the relative e¤ectiveness of public and private health. Using a sample of advanced democratic countries, we further infer these two parameters and construct the shares of public health in total health expenditure for each country, and find that the predicted values match the data quite well.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://fbe.unimelb.edu.au/__data/assets/pdf_file/0006/784356/1157.pdf
Download Restriction: no

Paper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 1157.

as
in new window

Length: 51 pages
Date of creation: 2012
Handle: RePEc:mlb:wpaper:1157
Contact details of provider: Postal:
Department of Economics, The University of Melbourne, 4th Floor, FBE Building, Level 4, 111 Barry Street. Victoria, 3010, Australia

Phone: +61 3 8344 8560
Fax: +61 3 8344 6899
Web page: http://fbe.unimelb.edu.au/economics
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as
in new window


  1. Epple, Dennis & Romano, Richard E, 1996. "Public Provision of Private Goods," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 57-84, February.
  2. Ferrie, Joseph & Rolf, Karen, 2011. "Socioeconomic status in childhood and health after age 70: A new longitudinal analysis for the U.S., 1895–2005," Explorations in Economic History, Elsevier, vol. 48(4), pages 445-460.
  3. Mariacristina De Nardi & Eric French & John B. Jones, 2010. "Why Do the Elderly Save? The Role of Medical Expenses," Journal of Political Economy, University of Chicago Press, vol. 118(1), pages 39-75, 02.
  4. Chakraborty, Shankha, 2004. "Endogenous lifetime and economic growth," Journal of Economic Theory, Elsevier, vol. 116(1), pages 119-137, May.
  5. Gerard J. van den Berg & Maarten Lindeboom & France Portrait, 2006. "Economic Conditions Early in Life and Individual Mortality," American Economic Review, American Economic Association, vol. 96(1), pages 290-302, March.
  6. McAvinchey, Ian D & Yannopoulos, Andreas, 1994. "A Cost Function Approach to the Choice between Private and Public Acute Health Care Provision," Scottish Journal of Political Economy, Scottish Economic Society, vol. 41(2), pages 194-211, May.
  7. Hitiris, Theo & Posnett, John, 1992. "The determinants and effects of health expenditure in developed countries," Journal of Health Economics, Elsevier, vol. 11(2), pages 173-181, August.
  8. Orazio P. Attanasio & Carl Emmerson, 2003. "Mortality, Health Status, and Wealth," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 821-850, 06.
  9. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-927, October.
  10. Jonathan Gruber & Kosali Simon, 2007. "Crowd-Out Ten Years Later: Have Recent Public Insurance Expansions Crowded Out Private Health Insurance?," NBER Working Papers 12858, National Bureau of Economic Research, Inc.
  11. Hsu, Minchung & Lee, Junsang, 2013. "The Provision Of Public Universal Health Insurance: Impacts On Private Insurance, Asset Holdings, And Welfare," Macroeconomic Dynamics, Cambridge University Press, vol. 17(06), pages 1252-1280, September.
  12. Parker, Susan W. & Wong, Rebeca, 1997. "Household income and health care expenditures in Mexico," Health Policy, Elsevier, vol. 40(3), pages 237-255, June.
  13. Gerdtham, Ulf-G. & Jonsson, Bengt, 1991. "Health care expenditure in Sweden - an international comparison," Health Policy, Elsevier, vol. 19(2-3), pages 211-228, December.
  14. Juergen Jung & Chung Tran, 2010. "Medical Consumption Over the Life Cycle: Facts from a U.S. Medical Expenditure Panel Survey," Discussion Papers 2010-08, School of Economics, The University of New South Wales.
  15. Robert E. Hall & Charles I. Jones, 2007. "The Value of Life and the Rise in Health Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 39-72.
  16. 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.
  17. Shankha Chakraborty & Mausumi Das, 2005. "Mortality, Human Capital and Persistent Inequality," Journal of Economic Growth, Springer, vol. 10(2), pages 159-192, 06.
  18. Kalemli-Ozcan, Sebnem, 2002. "Does the Mortality Decline Promote Economic Growth?," Journal of Economic Growth, Springer, vol. 7(4), pages 411-439, December.
  19. Kam Ki Tang & Jie Zhang, 2007. "Health, Education, And Life Cycle Savings In The Development Process," Economic Inquiry, Western Economic Association International, vol. 45(3), pages 615-630, 07.
  20. Di Matteo, Livio & Di Matteo, Rosanna, 1998. "Evidence on the determinants of Canadian provincial government health expenditures: 1965-1991," Journal of Health Economics, Elsevier, vol. 17(2), pages 211-228, April.
  21. Miguel Gouveia, 1997. "Majority rule and the public provision of a private good," Public Choice, Springer, vol. 93(3), pages 221-244, December.
  22. 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.
  23. Lakshmi K. Raut, 2003. "Long Term Effects of Preschool Investment on school Performance and Labor Market Outcome," Labor and Demography 0307002, EconWPA.
  24. Kennelly, Brendan & O'Shea, Eamon & Garvey, Eoghan, 2003. "Social capital, life expectancy and mortality: a cross-national examination," Social Science & Medicine, Elsevier, vol. 56(12), pages 2367-2377, June.
  25. Osang, Thomas & Sarkar, Jayanta, 2008. "Endogenous mortality, human capital and economic growth," Journal of Macroeconomics, Elsevier, vol. 30(4), pages 1423-1445, December.
  26. Ben Heijdra & Laurie Reijnders, 2013. "Economic Growth and Longevity Risk with Adverse Selection," De Economist, Springer, vol. 161(1), pages 69-97, March.
  27. Rangan Gupta & Cobus Vermeulen, 2010. "Private and Public Health Expenditures in an Endogenous Growth Model with Inflation Targeting," Annals of Economics and Finance, Society for AEF, vol. 11(1), pages 139-153, May.
  28. Joseph P. Ferrie & Karen Rolf, 2011. "Socioeconomic Status in Childhood and Health After Age 70: A New Longitudinal Analysis for the U.S., 1895-2005," NBER Working Papers 17016, National Bureau of Economic Research, Inc.
  29. Ettner, Susan L., 1996. "New evidence on the relationship between income and health," Journal of Health Economics, Elsevier, vol. 15(1), pages 67-85, February.
  30. Gerdtham, Ulf-G. & Sogaard, Jes & Andersson, Fredrik & Jonsson, Bengt, 1992. "An econometric analysis of health care expenditure: A cross-section study of the OECD countries," Journal of Health Economics, Elsevier, vol. 11(1), pages 63-84, May.
  31. Jose-Victor Rios-Rull & Per Krusell, 1999. "On the Size of U.S. Government: Political Economy in the Neoclassical Growth Model," American Economic Review, American Economic Association, vol. 89(5), pages 1156-1181, December.
  32. Parkin, David & McGuire, Alistair & Yule, Brian, 1987. "Aggregate health care expenditures and national income : Is health care a luxury good?," Journal of Health Economics, Elsevier, vol. 6(2), pages 109-127, June.
  33. Propper, Carol, 2000. "The demand for private health care in the UK," Journal of Health Economics, Elsevier, vol. 19(6), pages 855-876, November.
  34. Aisa, Rosa & Pueyo, Fernando, 2006. "Government health spending and growth in a model of endogenous longevity," Economics Letters, Elsevier, vol. 90(2), pages 249-253, February.
  35. Mueller,Dennis C., 2003. "Public Choice III," Cambridge Books, Cambridge University Press, number 9780521894753, Diciembre.
  36. Gruber, Jonathan & Simon, Kosali, 2008. "Crowd-out 10 years later: Have recent public insurance expansions crowded out private health insurance?," Journal of Health Economics, Elsevier, vol. 27(2), pages 201-217, March.
  37. Isabelle Joumard & Christophe André & Chantal Nicq, 2010. "Health Care Systems: Efficiency and Institutions," OECD Economics Department Working Papers 769, OECD Publishing.
  38. Di Matteo, Livio, 2000. "The determinants of the public-private mix in Canadian health care expenditures: 1975-1996," Health Policy, Elsevier, vol. 52(2), pages 87-112, June.
  39. Radhika Lahiri & Elizabeth Richardson, 2008. "Public and Private Expenditures on Health in the Presence of Inequality and Endogenous Mortality: A Political Economy Perspective," School of Economics and Finance Discussion Papers and Working Papers Series 240, School of Economics and Finance, Queensland University of Technology, revised 15 Dec 2008.
  40. Kelvin R. Utendorf & Rowena A. Pecchenino, 1999. "Social security, social welfare and the aging population," Journal of Population Economics, Springer;European Society for Population Economics, vol. 12(4), pages 607-623.
  41. Bethencourt, Carlos & Galasso, Vincenzo, 2008. "Political complements in the welfare state: Health care and social security," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 609-632, April.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:mlb:wpaper:1157. 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: (Muntasha Meemnun Khan)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.