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- Title
Can a Mixed Health Care System be Desirable on Equity Grounds?
- Authors
March, Maurice; Schroyen, Fred
- Abstract
Should health care provision be public, private, or both? We consider this question in a setting where people differ in their earnings capacity and face some illness risk. We assume that illness reduces an individual's time endowment when waiting for treatment. Treatment can be obtained in a competitive private sector(through private insurance) or in the National Health Service(NHS) where it is provided free of charge but after some(endogenous) waiting time. The equilibrium in the health care sector consists of a waiting time in the NHS such that no patient wants to switch health care provider. This equilibrium is governed by two public policies: the income tax system and the size of the NHS. We find that:(i) a mixed system with a small NHS is never desirable;(ii) actuarially fair sickness insurance is never desirable either;(iii) a mixed system with a sufficiently large NHS may improve on a pure public system if the dispersion of earnings capacities is large enough; and(iv) the welfare gains from such a mixed system are not likely to be significant.
- Subjects
MEDICAL care; INCOME tax; PUBLIC sector; ECONOMIC structure; CONFLICT of laws; POLITICAL planning
- Publication
Scandinavian Journal of Economics, 2005, Vol 107, Issue 1, p1
- ISSN
0347-0520
- Publication type
Article
- DOI
10.1111/j.1467-9442.2005.00392.x