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Public Provision and Cross-Border Health Care

Author

Listed:
  • Granlund David

    (Department of Economics, Umeå University, SE-901 87 Umeå, Sweden)

  • Wikström Magnus

    (Department of Economics, Umeå University, SE-901 87 Umeå, Sweden)

Abstract

We study how the optimal public provision of health care depends on whether or not individuals have an option to seek publicly financed treatment in other regions. We find that, relative to the first-best solution, the government has an incentive to over-provide health care to low-income individuals. When cross-border health care takes place, this incentive is solely explained by that over-provision facilitates redistribution. The reason why more health care facilitates redistribution is that high-ability individuals mimicking low-ability individuals benefit the least from health care when health and labor supply are complements. Without cross-border health care, higher demand for health care among high-income individuals also contributes to the over-provision given that high-income individuals do not work considerably less than low-income individuals and that the government cannot discriminate between the income groups by giving them different access to health care.

Suggested Citation

  • Granlund David & Wikström Magnus, 2016. "Public Provision and Cross-Border Health Care," Forum for Health Economics & Policy, De Gruyter, vol. 19(2), pages 157-177, December.
    • Handle: RePEc:bpj:fhecpo:v:19:y:2016:i:2:p:157-177:n:1
    DOI: 10.1515/fhep-2014-0024
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    More about this item

    Keywords

    health expenditure; income redistribution; patient mobility; public provision; waiting time;
    All these keywords.

    JEL classification:

    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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