Waiting Times and Cost Sharing for a Public Health Care Service with a Private Alternative: A Multi-Agent Approach

Abstract:     
Cost sharing represents a well-established tool for the control of health care demand in many Oecd countries. However, it is used with caution and in combination with other instruments in order to avoid potential negative impacts on access to essential health care services. Waiting lists and waiting times represent an alternative (and implicit) way to control demand in public health care systems, even though in terms of welfare rationing by waiting may be an inferior solution to cost sharing.

This paper focuses on the use of waiting times, cost sharing, and other tools (in particular, priority and appropriateness criteria) in order to control demand for a public outpatient health service in presence of a fully paid out-of-pocket private alternative. We develop an agent-based model where heterogeneous agents maximise their individual utility based on income and health status. On this basis, we develop some computational experiments based on micro-simulations to offer some useful insights for health care policy. In particular, we show that: i) the presence of a private alternative to a public treatment can improve social welfare and health equity in a NHS, when public supply is constrained by a fixed budget and longer waiting times than the private one; ii) using prioritisation of waiting lists without any copayment to control the demand for public treatment may produce high performances in terms of social welfare, health equality and policy efficiency; iii) applying a moderate copayment rate as a tool to control public demand could determine the same policy efficiency of using only priority lists, if the copayment revenues are used to fund the public provision.

Number of Pages in PDF File: 40

Keywords: health care demand, private provision, waiting times, cost-sharing, equity, agent-based model

JEL Classification: I14, I18, C63

Accepted Paper Series