Demand for Private Health Insurance: Is There a Quality Gap?

UPF Economics and Business Working Paper No. 531

33 Pages Posted: 29 Jun 2001

See all articles by Joan Costa-Font

Joan Costa-Font

London School of Economics & Political Science (LSE)

Jaume García

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

Abstract

Quality of care is qualified as a main determinant of the demand for voluntary private health insurance (PHI) in National Health Systems (NHS). This paper provides new evidence on the influence of the quality gap between public and private health insurance and other demand determinants in the demand for PHI in Catalonia. The demand for PHI is modelled as a demand for health care quality. Unlike previous studies, the database employed allows for the development of a link between the theoretical and the empirical model dealing with unobserved heterogeneity and endogeneity issues. Results suggest that a rise in PHI quality enhances an equivalent influence in the demand for PHI as an equal reduction of NHS quality. Income and price elasticity estimates are consistent with the observed feature that PHI appears to be a luxury good and individuals tend to be relatively insensible to tax relief's and monetary co-payments in insurance contracts.

Keywords: Private health insurance, health care quality, insurance premium

JEL Classification: I1, G1

Suggested Citation

Costa-Font, Joan and García Villar, Jaume, Demand for Private Health Insurance: Is There a Quality Gap?. UPF Economics and Business Working Paper No. 531. Available at SSRN: https://ssrn.com/abstract=273418 or http://dx.doi.org/10.2139/ssrn.273418

Joan Costa-Font

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

Houghton Street
London, WC2A 2AE
United Kingdom

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

Jaume García Villar (Contact Author)

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain

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