A Welfare Analysis of Rationing in Health Care Provision

17 Pages Posted: 16 Mar 2016

See all articles by Laura Levaggi

Laura Levaggi

Free University of Bozen - Faculty of Science and Technology

Rosella Levaggi

University of Brescia - Department of Economics and Management

Date Written: March 16, 2016

Abstract

We study the welfare properties of direct restrictions based on cost-effectiveness against indirect methods represented by waiting lists in a public health care system. Health care is supplied for free, but with some restrictions by the public health sector. Patients can choose to address their demand else-where by stipulating a private health care insurance policy. Our model shows that if the individual response to treatment is independent of income and cannot be observed by the patient, the choice of opting out simply depends on income and the redistributive effects of both instruments are quite similar. In general, restrictions may only improve welfare of relatively rich individuals, usually those that opt out of the public health care system. Form a policy point of view, our model casts serious doubts on the use of these instruments for redistributive purposes.

Keywords: Waiting lists; Explicit restrictions; Welfare analysis; Redistribution

JEL Classification: I11; I18; H51

Suggested Citation

Levaggi, Laura and Levaggi, Rosella, A Welfare Analysis of Rationing in Health Care Provision (March 16, 2016). Available at SSRN: https://ssrn.com/abstract=2748642 or http://dx.doi.org/10.2139/ssrn.2748642

Laura Levaggi

Free University of Bozen - Faculty of Science and Technology ( email )

Universitätsplatzt, 1
Bozen, 39100
Italy

Rosella Levaggi (Contact Author)

University of Brescia - Department of Economics and Management ( email )

Via San Faustino 74B
Brescia, 25122
Italy
+39 03 0298 8825 (Phone)
+39 03 0298 8837 (Fax)

HOME PAGE: http://www.eco.unibs.it/segdse/rlev/index.htm

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