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Public Policy for Health Care

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  • David M. Cutler

Abstract

This paper reviews the public sector role in the provision of health care. A first role of the government is to use tax policy to correct externalities associated with individual behaviors. Estimates suggest that the external effects of many `sins' such as alcohol consumption are greater than current taxes on these goods. A second role of the government is to correct distortions in markets for medical care and health insurance. Markets for health insurance have traditionally not offered a choice between cost and the generosity of benefits. As a result, there have been incentives for excessive technological development, particularly technologies that increase spending. Once technologies have diffused widely, they are overutilized. Policies to increase choice in insurance markets could increase welfare, provided they limit segmentation on the basis of risk.

Suggested Citation

  • David M. Cutler, 1996. "Public Policy for Health Care," NBER Working Papers 5591, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:5591
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Robert F. Graboyes, 2000. "Getting better, feeling worse : cure rates, health insurance, and welfare," Working Paper 00-05, Federal Reserve Bank of Richmond.
    2. Jin Feng & Zheng Song, 2009. "Health care system in rural China: A quantitative approach based on heterogeneous individuals," Frontiers of Economics in China, Springer;Higher Education Press, vol. 4(2), pages 153-172, June.
    3. Walter M. Cadette, 1996. "Rethinking Health Care Policy: The Case for Retargeting Tax Subsidies," Economics Working Paper Archive wp_171, Levy Economics Institute.
    4. Stéphane Jacobzone, 1997. "Systèmes mixtes d'assurance maladie, équité, gestion du risque et maîtrise des coûts," Économie et Prévision, Programme National Persée, vol. 129(3), pages 189-205.
    5. Frits Bos & Rudy Douven & Esther Mot, 2004. "Four scenarios for the future of the public sector and healthcare," CPB Document 72, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Janet M. Currie & W. Bentley MacLeod, 2018. "Understanding Doctor Decision Making: The Case of Depression," NBER Working Papers 24955, National Bureau of Economic Research, Inc.
    7. Edward Stringham & Ilkay Pulan, 2006. "Evaluating Economic Justifications for Alcohol Restrictions," American Journal of Economics and Sociology, Wiley Blackwell, vol. 65(4), pages 971-990, October.
    8. Mustapha Rafiu Ayobanji & Onikosi-Alliyu Saidat Oluwatoyin & Babalola Abdurrouf, 2021. "Impact of Government Health Expenditure on Health Outcomes in the West African Sub-Region," Folia Oeconomica Stetinensia, Sciendo, vol. 21(1), pages 48-59, June.
    9. Frits Bos & Rudy Douven & Esther Mot, 2004. "Four scenarios for the future of the public sector and healthcare," CPB Document 72.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    10. Deborah Wilson, 2005. "Acquisition and disclosure of genetic information under alternative policy regimes," The Centre for Market and Public Organisation 05/118, The Centre for Market and Public Organisation, University of Bristol, UK.
    11. Walter M. Cadette, 1999. "Rethinking Health Care Policy: The Case for Retargeting Tax Subsidies," Macroeconomics 9902011, University Library of Munich, Germany.
    12. Xinyu Li & Christian Waibel, 2021. "Patients' free choice of physicians is not always good," Health Economics, John Wiley & Sons, Ltd., vol. 30(11), pages 2751-2765, November.
    13. Stephen Kwasi Opoku Duku & Francis Asenso-Boadi & Edward Nketiah-Amponsah & Daniel Kojo Arhinful, 2016. "Utilization of healthcare services and renewal of health insurance membership: evidence of adverse selection in Ghana," Health Economics Review, Springer, vol. 6(1), pages 1-12, December.
    14. Udo Schneider, 2002. "Beidseitige Informationsasymmetrien in der Arzt-Patient-Beziehung: Implikationen für die GKV," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 71(4), pages 447-458.
    15. Robert F. Graboyes, 2000. "Medicine worse than the malady : cure rates, population shifts, and health insurance," Working Paper 00-06, Federal Reserve Bank of Richmond.

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    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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