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Public versus private health care in a national health service

✍ Scribed by Kurt R. Brekke; Lars Sørgard

Publisher
John Wiley and Sons
Year
2007
Tongue
English
Weight
227 KB
Volume
16
Category
Article
ISSN
1057-9230

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✦ Synopsis

Abstract

This paper studies the interaction between public and private health care provision in a National Health Service (NHS), with free public care and costly private care. The health authority decides whether or not to allow private provision and sets the public sector remuneration. The physicians allocate their time (effort) in the public and (if allowed) in the private sector based on the public wage income and the private sector profits. We show that allowing physician dual practice ‘crowds out’ public provision, and results in lower overall health care provision. While the health authority can mitigate this effect by offering a higher wage, we find that a ban on dual practice is more efficient if private sector competition is weak and public and private care are sufficiently close substitutes. On the other hand, if private sector competition is sufficiently tough, a mixed system, with physician dual practice, is always preferable to a pure NHS system. Copyright © 2006 John Wiley & Sons, Ltd.

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