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Public and private health-care financing with alternate public rationing rules

✍ Scribed by Katherine Cuff; Jeremiah Hurley; Stuart Mestelman; Andrew Muller; Robert Nuscheler

Publisher
John Wiley and Sons
Year
2010
Tongue
English
Weight
246 KB
Volume
21
Category
Article
ISSN
1057-9230

No coin nor oath required. For personal study only.

✦ Synopsis

SUMMARY

We develop a model to analyze parallel public and private health‐care financing under two alternative public sector rationing rules: needs‐based rationing and random rationing. Individuals vary in income and severity of illness. There is a limited supply of health‐care resources used to treat individuals, causing some individuals to go untreated. Insurers (both public and private) must bid to obtain the necessary health‐care resources to treat their beneficiaries. Given individuals' willingnesses‐to‐pay for private insurance are increasing in income, the introduction of private insurance diverts treatment from relatively poor to relatively rich individuals. Further, the impact of introducing parallel private insurance depends on the rationing mechanism in the public sector. We show that the private health insurance market is smaller when the public sector rations according to need than when allocation is random. Copyright © 2010 John Wiley & Sons, Ltd.

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