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Ramsey Waits: Allocating Public Health Service Resources when there is Rationing by Waiting

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  • Hugh Gravelle
  • Luigi Siciliani

Abstract

The optimal allocation of a public health care budget across treatments must take account of the way in which care is rationed within treatments since this will affect their marginal value. We investigate the optimal allocation rules for health care systems where user charges are fixed and care is rationed by waiting. The optimal waiting time is higher for treatments with demands more elastic to waiting time, higher costs, lower charges, smaller marginal welfare loss from waiting by treated patients, and smaller marginal welfare losses from under-consumption of care. The results hold for a wide range of welfarist and non-welfarist objective functions and for systems in which there is also a private health care sector. They imply that allocation rules based purely on cost effectiveness ratios are suboptimal because they assume that there is no rationing within treatments.

Suggested Citation

  • Hugh Gravelle & Luigi Siciliani, 2007. "Ramsey Waits: Allocating Public Health Service Resources when there is Rationing by Waiting," Discussion Papers 07/15, Department of Economics, University of York.
    • Handle: RePEc:yor:yorken:07/15
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    Citations

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    Cited by:

    1. Laudicella, Mauro & Siciliani, Luigi & Cookson, Richard, 2012. "Waiting times and socioeconomic status: Evidence from England," Social Science & Medicine, Elsevier, vol. 74(9), pages 1331-1341.
    2. Sá, Luís & Siciliani, Luigi & Straume, Odd Rune, 2019. "Dynamic hospital competition under rationing by waiting times," Journal of Health Economics, Elsevier, vol. 66(C), pages 260-282.
    3. Hugh Gravelle & Luigi Siciliani, 2008. "Is waiting‐time prioritisation welfare improving?," Health Economics, John Wiley & Sons, Ltd., vol. 17(2), pages 167-184, February.
    4. Grassi, Simona & Ma, Ching-to Albert, 2011. "Optimal public rationing and price response," Journal of Health Economics, Elsevier, vol. 30(6), pages 1197-1206.
    5. Jan Erik Askildsen & Tor Helge Holmås & Oddvar Kaarboe, 2011. "Monitoring prioritisation in the public health‐care sector by use of medical guidelines. The case of Norway," Health Economics, John Wiley & Sons, Ltd., vol. 20(8), pages 958-970, August.
    6. M. Lippi Bruni & C. Ugolini & R. Verzulli, 2018. "Disentangling the effect of waiting times on hospital choice: Evidence from a panel data analysis," Working Papers wp1118, Dipartimento Scienze Economiche, Universita' di Bologna.
    7. Silviya Nikolova; & Arthur Sinko; & Matt Sutton;, 2012. "Do maximum waiting times guarantees change clinical priorities? A Conditional Density Estimation approach," Health, Econometrics and Data Group (HEDG) Working Papers 12/07, HEDG, c/o Department of Economics, University of York.
    8. Hugh Gravelle & Luigi Siciliani, 2009. "Third degree waiting time discrimination: optimal allocation of a public sector healthcare treatment under rationing by waiting," Health Economics, John Wiley & Sons, Ltd., vol. 18(8), pages 977-986, August.
    9. Januleviciute, Jurgita & Askildsen, Jan Erik & Holmås, Tor Helge & Kaarbøe, Oddvar & Sutton, Matt, 2010. "The Impact of Different Prioritisation Policies on Waiting Times: A Comparative Analysis of Norway and Scotland," Working Papers in Economics 07/10, University of Bergen, Department of Economics.
    10. Gravelle, Hugh & Siciliani, Luigi, 2008. "Optimal quality, waits and charges in health insurance," Journal of Health Economics, Elsevier, vol. 27(3), pages 663-674, May.
    11. Laura Levaggi & Rosella Levaggi, 2017. "Rationing in health care provision: a welfare approach," International Journal of Health Economics and Management, Springer, vol. 17(2), pages 235-249, June.
    12. Nikolova, Silviya & Sinko, Arthur & Sutton, Matt, 2015. "Do maximum waiting times guarantees change clinical priorities for elective treatment? Evidence from Scotland," Journal of Health Economics, Elsevier, vol. 41(C), pages 72-88.

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    More about this item

    Keywords

    Waiting times; prioritisation; rationing; cost effectiveness ratios;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • 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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