IDEAS home Printed from https://ideas.repec.org/a/wly/hlthec/v22y2013i2p180-193.html
   My bibliography  Save this article

Incorporating Financial Protection Into Decision Rules For Publicly Financed Healthcare Treatments

Author

Listed:
  • Peter C. Smith

Abstract

Almost all health systems seek to offer some form of publicly financed healthcare insurance, and governments must therefore choose the size of the benefit package and the types of treatments to cover. Conventionally, the usual approach of economists has been to recommend choices on the basis of cost effectiveness of treatments, using metrics such as the ‘cost per quality adjusted life year’. However, this approach is based on the assumption of health maximization subject to a budget constraint and ignores the potential impact of any additional concern with protecting individuals from the financial consequences of a health shock. Furthermore, it does not take account of the possible availability of complementary privately funded health care. This paper develops a model in which risk‐averse individuals care about health but also place a value on protection from the financial consequences of rare but costly events. The paper shows how conventional cost‐effectiveness analysis can readily be augmented to take account of financial protection objectives. The results depend on whether or not there exists a market in complementary privately funded health care. They have important implications for the methodology adopted by health technology assessment agencies and for the broader design of publicly funded health systems. Copyright © 2012 John Wiley & Sons, Ltd.

Suggested Citation

  • Peter C. Smith, 2013. "Incorporating Financial Protection Into Decision Rules For Publicly Financed Healthcare Treatments," Health Economics, John Wiley & Sons, Ltd., vol. 22(2), pages 180-193, February.
    • Handle: RePEc:wly:hlthec:v:22:y:2013:i:2:p:180-193
    DOI: 10.1002/hec.2774
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/hec.2774
    Download Restriction: no
    File URL: https://libkey.io/10.1002/hec.2774?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Drummond, Michael F. & Sculpher, Mark J. & Torrance, George W. & O'Brien, Bernie J. & Stoddart, Greg L., 2005. "Methods for the Economic Evaluation of Health Care Programmes," OUP Catalogue, Oxford University Press, edition 3, number 9780198529453.
    2. Petretto, Alessandro, 1999. "Optimal social health insurance with supplementary private insurance," Journal of Health Economics, Elsevier, vol. 18(6), pages 727-745, December.
    3. Blomqvist, A. & Johansson, P-O., 1997. "Economic efficiency and mixed public/private insurance," Journal of Public Economics, Elsevier, vol. 66(3), pages 505-516, December.
    4. Besley, Timothy & Coate, Stephen, 1991. "Public Provision of Private Goods and the Redistribution of Income," American Economic Review, American Economic Association, vol. 81(4), pages 979-984, September.
    5. McPake, Barbara, 1993. "User charges for health services in developing countries: A review of the economic literature," Social Science & Medicine, Elsevier, vol. 36(11), pages 1397-1405, June.
    6. Selden, Thomas M., 1993. "Should the government provide catastrophic insurance?," Journal of Public Economics, Elsevier, vol. 51(2), pages 241-247, June.
    7. Smith, Peter C., 2005. "User charges and priority setting in health care: balancing equity and efficiency," Journal of Health Economics, Elsevier, vol. 24(5), pages 1018-1029, September.
    8. Ireland, Norman J., 1990. "The mix of social and private provision of goods and services," Journal of Public Economics, Elsevier, vol. 43(2), pages 201-219, November.
    9. Besley, Timothy, 1989. "Publicly provided disaster insurance for health and the control of moral hazard," Journal of Public Economics, Elsevier, vol. 39(2), pages 141-156, July.
    10. Blomqvist, Ake & Horn, Henrik, 1984. "Public health insurance and optimal income taxation," Journal of Public Economics, Elsevier, vol. 24(3), pages 353-371, August.
    11. Epple, Dennis & Romano, Richard E., 1996. "Ends against the middle: Determining public service provision when there are private alternatives," Journal of Public Economics, Elsevier, vol. 62(3), pages 297-325, November.
    12. Hoel, Michael, 2007. "What should (public) health insurance cover?," Journal of Health Economics, Elsevier, vol. 26(2), pages 251-262, March.
    13. Munro, Alistair, 1991. "The optimal public provision of private goods," Journal of Public Economics, Elsevier, vol. 44(2), pages 239-261, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Özlem Karsu & Alec Morton, 2021. "Trading off health and financial protection benefits with multiobjective optimization," Health Economics, John Wiley & Sons, Ltd., vol. 30(1), pages 55-69, January.
    2. Stéphane Verguet & Ramanan Laxminarayan & Dean T. Jamison, 2015. "Universal Public Finance of Tuberculosis Treatment in India: An Extended Cost‐Effectiveness Analysis," Health Economics, John Wiley & Sons, Ltd., vol. 24(3), pages 318-332, March.
    3. Zasimova, Liudmila & Kossova, Elena, 2016. "Empirical analysis of out-of-pocket expenditures on medicine in Russia," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 42, pages 75-99.
    4. Ochalek, Jessica & Manthalu, Gerald & Smith, Peter C., 2020. "Squaring the cube: Towards an operational model of optimal universal health coverage," Journal of Health Economics, Elsevier, vol. 70(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Simona GRASSI, 2006. "On the characteristics of a mixed system of provision of a private good. An application to health care," Departmental Working Papers 2006-14, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    2. Raj Chetty & Emmanuel Saez, 2010. "Optimal Taxation and Social Insurance with Endogenous Private Insurance," NBER Chapters, in: Income Taxation, Trans-Atlantic Public Economics Seminar (TAPES), pages 85-114, National Bureau of Economic Research, Inc.
    3. Zanola, Roberto, 2000. "Public goods versus publicly provided private goods in a two-class economy," POLIS Working Papers 12, Institute of Public Policy and Public Choice - POLIS.
    4. Jung, Juergen & Tran, Chung, 2022. "Social health insurance: A quantitative exploration," Journal of Economic Dynamics and Control, Elsevier, vol. 139(C).
    5. Jihong Ding & Minglai Zhu, 2009. "A theoretical investigation of the reformed public health insurance in urban China," Frontiers of Economics in China, Springer;Higher Education Press, vol. 4(1), pages 1-29, March.
    6. Omar Paccagnella & Vincenzo Rebba & Guglielmo Weber, 2013. "VOLUNTARY PRIVATE HEALTH INSURANCE AMONG THE OVER 50s IN EUROPE," Health Economics, John Wiley & Sons, Ltd., vol. 22(3), pages 289-315, March.
    7. Petretto, Alessandro, 1999. "Optimal social health insurance with supplementary private insurance," Journal of Health Economics, Elsevier, vol. 18(6), pages 727-745, December.
    8. Boone, Jan, 2015. "Basic versus supplementary health insurance: Moral hazard and adverse selection," Journal of Public Economics, Elsevier, vol. 128(C), pages 50-58.
    9. Alessandro Petretto, 2013. "On the Fuzzy Boundaries between Public and Private in Health-Care Organization and Funding Systems," Rivista di Politica Economica, SIPI Spa, issue 1, pages 327-370, January-M.
    10. Rachel J. Huang & Larry Y. Tzeng, 2007. "Optimal Tax Deductions for Net Losses Under Private Insurance With an Upper Limit," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 74(4), pages 883-893, December.
    11. Bergstrom, Ted & Blomquist, Soren, 1996. "The political economy of subsidized day care," European Journal of Political Economy, Elsevier, vol. 12(3), pages 443-457, November.
    12. Selden, Thomas M., 1997. "More on the economic efficiency of mixed public/private insurance," Journal of Public Economics, Elsevier, vol. 66(3), pages 517-523, December.
    13. Alessandro Balestrino, 2000. "Mixed Tax Systems and the Public Provision of Private Goods," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 7(4), pages 463-478, August.
    14. Sören Blömquist & Vidar Christiansen, 1998. "Price Subsidies Versus Public Provision," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(3), pages 283-306, July.
    15. Finkelstein, Amy, 2004. "The interaction of partial public insurance programs and residual private insurance markets: evidence from the US Medicare program," Journal of Health Economics, Elsevier, vol. 23(1), pages 1-24, January.
    16. Blomquist, Soren & Christiansen, Vidar, 1998. "Topping Up or Opting Out? The Optimal Design of Public Provision Schemes," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 399-411, May.
    17. Johannesson, Magnus & Johansson, Per-Olov & Soderqvist, Tore, 1998. "Time spent on waiting lists for medical care: an insurance approach," Journal of Health Economics, Elsevier, vol. 17(5), pages 627-644, October.
    18. Buckley, Neil & Cuff, Katherine & Hurley, Jeremiah & Mestelman, Stuart & Thomas, Stephanie & Cameron, David, 2015. "Support for public provision of a private good with top-up and opt-out: A controlled laboratory experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 111(C), pages 177-196.
    19. Bergstrom, Ted & Blomquist, Soren, 1996. "The political economy of subsidized day care," European Journal of Political Economy, Elsevier, vol. 12(3), pages 443-457, November.
    20. George Tridimas, 1996. "Targeted and Universal Benefits in Kind Under Take-Up Costs," Public Finance Review, , vol. 24(4), pages 464-480, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:hlthec:v:22:y:2013:i:2:p:180-193. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/5749 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.