Is There a Secession of the Wealthy? Private Health Insurance Uptake and National Health System Support

23 Pages Posted: 17 Jun 2008

See all articles by Joan Costa-Font

Joan Costa-Font

London School of Economics & Political Science (LSE)

Mireia Jofre-Bonet

City University London - Department of Economics

Abstract

The purchase of private health insurance (PHI) as a means to partially supplement the National Health System (NHS) coverage is often regarded as a potential signal for a declining support for the NHS. Exploiting the fact that PHI is typically purchased by the most affluent, in this paper we test the so called secession of the wealthy hypothesis whereby the likelihood of expressing lack of support for the NHS increases with having supplementary PHI. Using empirical data from Catalonia, we draw upon an empirical strategy that circumvents an obvious simultaneity problem by estimating both a recursive bivariate probit as well as an IV probit. After controlling for insurance premium, household income and other socio-demographic determinants, we find that the purchase of PHI reduces the propensity of individuals to support the NHS. We also find evidence that PHI is a luxury good and sensitive to fiscal incentives.

Suggested Citation

Costa-Font, Joan and Jofre-Bonet, Mireia, Is There a Secession of the Wealthy? Private Health Insurance Uptake and National Health System Support. Bulletin of Economic Research, Vol. 60, Issue 3, pp. 265-287, July 2008. Available at SSRN: https://ssrn.com/abstract=1146700 or http://dx.doi.org/10.1111/j.1467-8586.2008.00285.x

Joan Costa-Font (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://https://joancostaifont.org/

Mireia Jofre-Bonet

City University London - Department of Economics ( email )

Northampton Square
London, EC1V 0HB
United Kingdom

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