Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/75694 
Year of Publication: 
2001
Series/Report no.: 
CESifo Working Paper No. 562
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We consider an economy where most of the health care is publicly provided,and where there is waiting time for several types of treatments. Privatehealth care without waiting time is an option for the patients in the publichealth queue. We show that although patients with low waiting costs willchoose public treatment, they may be better off with waiting time thanwithout. The reason is that waiting time induces patients with high waitingcosts to choose private treatment, thus reducing the cost of public healthcare that everyone pays for. Even if higher quality (i.e. zero waiting time) canbe achieved at no cost, the self-selection induced redistribution may implythat it is socially optimal to provide health care publicly and at an inferiorquality level. We give a detailed discussion of the circumstances in which it isoptimal to have waiting time for public health treatment. Moreover, we studythe interaction between this quality decision and the optimal tax/subsidy onprivate health care.
Subjects: 
public health care
private health care
waiting time
healthqueues.
Document Type: 
Working Paper
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