Moral hazard and adverse selection in Australian private hospitals: 1989-1990

The Australian hospital system is characterized by the co-existence of private hospitals, where individuals pay for services and public hospitals, where services are free to all but delivered after a waiting time. The decision to purchase insurance for private hospital treatment depends on the trade-off between the price of treatment, waiting time, and the insurance premium. Clearly, the potential for adverse selection and moral hazard exists. When the endogeneity of the insurance decision is accounted for, the extent of moral hazard can substantially increase the expected length of a hospital stay by a factor of up to 3.     

Waiting times for elective surgery and the decision to buy private health insurance

More than 45% of Australians buy health insurance for private treatment in hospital. This is despite having access to universal and free public hospital treatment. Anecdotal evidence suggests that avoidance of long waits for public treatment is one possible explanation for the high rate of insurance coverage. In this study, we investigate the effect of waiting on individual decisions to buy private health insurance. Individuals are assumed to form an expectation of their own waiting time as a function of their demographics and health status. We model waiting times using administrative data on the population hospitalised for elective procedures in public hospitals and use the parameter estimates to impute the expected waiting time and the probability of a long wait for a representative sample of the population. We find that expected waiting time does not increase the probability of buying insurance but a high probability of experiencing a long wait does. On average, waiting time has no significant impact on insurance. In addition, we find that favourable selection into private insurance, measured by self-assessed health, is no longer significant once waiting time variables are included. This result suggests that a source of favourable selection may be aversion to waiting among healthier people.     

Discrimination in waiting times by insurance type and financial soundness of German acute care hospitals

This paper shows that patients with private health insurance (PHI) are being offered significantly shorter waiting times than patients with statutory health insurance (SHI) in German acute hospital care. This behavior may be driven by the higher expected profitability of PHI relative to SHI holders. Further, we find that hospitals offering private insurees shorter waiting times when compared with SHI holders have a significantly better financial performance than those abstaining from or with less discrimination.     

Private medical insurance and saving: evidence from the British Household Panel Survey

This paper uses the British Household Panel Survey for the years 1996-2000 to investigate the relationship between saving and private medical insurance in the UK. Because the National Health Service (NHS) gives comprehensive health coverage and is generally free at source, one would not expect private medical insurance to crowd-out saving. However, the NHS being characterised by long waiting lists and generally poor quality, many people prefer to use private health services. In such circumstances, those individuals who are not covered by private medical insurance, and who are therefore more exposed to facing unexpected out-of-pocket private health care expenditures or income losses while waiting for public treatment might save more for precautionary reasons than those who are covered. According to our findings, which are based on a wide range of econometric specifications, there is a positive association between insurance coverage and saving, suggesting that private medical insurance does not generally crowd-out private saving. However, we found some evidence of crowding-out in those areas where the quality of medical facilities is perceived as poor, and in rural areas, characterised by fewer NHS providers.     

Public health care and private insurance demand: The waiting time as a link

This paper analyzes the effect of waiting times in the Spanish public health system on the demand for private health insurance. Expected utility maximization determines whether or not individuals buy a private health insurance. The decision depends not only on consumer's covariates such as income, socio-demographic characteristics and health status, but also on the quality of the treatment by the public provider. We interpret waiting time as a qualitative attribute of the health care provision. The empirical analysis uses the Spanish Health Survey of 1993. We cope with the absence of income data by using the Spanish Family Budget Survey of 1990–91 as a complementary data set, following the Arellano–Meghir method [4]. Results indicate that a reduction in the waiting time lowers the probability of buying private health insurance. This suggests the existence of a crowd-out in the health care provision market. This revised version was published online in July 2006 with corrections to the Cover Date.     

Elasticity estimates from a dynamic model of interrelated demands for private and public acute health care

This paper investigates the private/public mix in acute health care provision in the UK. It uses an interrelated shares model derived from a translog function combined with dynamic adjustment. Using prices for public care constructed from NHS waiting lists, the insurance cost of private care and the retain price index, impact, intermediate and long run elasticities of demand for private and public care are obtained. The role of hospital consultants and of an aging population are also considered.     

Public versus private: evidence on health insurance selection

This paper models health insurance choice in Chile (public versus private) as a dynamic, stochastic process, where individuals consider premiums, expected out-of pocket costs, personal characteristics and preferences. Insurance amenities and restrictions against pre-existing conditions among private insurers introduce asymmetry to the model. We confirm that the public system services a less healthy and wealthy population (adverse selection for public insurance). Simulation of choices over time predicts a slight crowding out of private insurance only for the most pessimistic scenario in terms of population aging and the evolution of education. Eliminating the restrictions on pre-existing conditions would slightly ameliorate the level (but not the trend) of the disproportionate accumulation of less healthy individuals in the public insurance program over time.     

Public health care with waiting time: the role of supplementary private health care

We consider an economy where most of the health care is publicly provided, and where there is waiting time for several types of treatments. Private health care without waiting time is an option for the patients in the public health queue. We show that although patients with low waiting costs will choose public treatment, they may be better off with waiting time than without. The reason is that waiting time induces patients with high waiting costs to choose private treatment, thus reducing the cost of public health care that everyone pays for. Even if higher quality (i.e. zero waiting time) can be achieved at no cost, the self-selection induced redistribution may imply that it is socially optimal to provide health care publicly and at an inferior quality level. We give a detailed discussion of the circumstances in which it is optimal to have waiting time for public health treatment. Moreover, we study the interaction between this quality decision and the optimal tax/subsidy on private health care.     

Insurance status and waiting times for hospital-based services in Ireland

In Ireland long waits for public hospital services are a feature of the healthcare system, with limited evidence that waits for private hospital services (delivered in both public and private hospitals) are shorter. In 2008, in an attempt to ensure more equitable access to hospital-based services, a ‘common waiting list’ for all patients within public hospitals was proposed. The aim of this paper is to analyse waiting times in Ireland for hospital services for patients with and without private health insurance (PHI) and to examine whether the 2008 reform reduced the differential in waiting. The analysis used data from the 2007 and 2010 health module of the Quarterly National Household survey (QNHS). The impact of insurance status on waiting times was analysed for the period before and after the reforms. A higher proportion of those without PHI were waiting more than three months for hospital services relative to those with PHI. There was no evidence that the 2008 reforms reduced the differential. Anecdotal evidence suggests that the proposals were not fully implemented, although expansion of capacity for private patients’ treatment in private hospitals is a possible confounding factor.     

Do rich Israelis wait less for medical care?

Background

Waiting time to receive medical care is a disturbing phenomenon in many healthcare systems. Furthermore, waiting times are usually distributed in the population in an inequitable way.

Objectives

In this paper we focus on one aspect of the possible inequities associated with waiting times for MRIs and elective surgeries – different waiting times by income level.

Methods

We used the CBS’s 2009-2010 linked health-income data, which included 7,175 households (24,595 individuals). Actual waiting time for MRI and expected waiting time for surgeries were measured on a 4-categories ordinal scale. Both ordered probit and sample selection ordered probit – to account for possible correlation between the need for these services and the waiting time for them – were used to estimate the income effect on waiting time, controlling for a vast set of personal characteristics.

Results

Rich Israelis are more likely than poor ones to be, controlling for health state, on the waiting list for MRI, but not for surgeries. Income has no effect on the actual waiting time for MRI. Income has no effect on the expected waiting time for surgeries in the probit model, but has a significant negative effect in the sample selection model. Ownership of voluntary insurance increases the probability to be on the waiting list for both MRI and surgeries, but has no effect – as does having public finance only of the care – on waiting time. The results also show that sicker persons and those residing in the periphery wait longer for surgery.

Conclusions

We found some evidence that rich persons expect a shorter wait for surgeries, which is not explained by voluntary insurance ownership or by using private finance. We found solid evidence that the expected waiting time for surgeries is longer for sicker persons and those in the periphery. Further research with a larger sample based on actual waiting times might shed more light on the issue of waiting time for medical care and its distribution in Israel.

     

Are tax subsidies for private medical insurance self-financing? Evidence from a microsimulation model

This paper develops an empirical strategy to estimate whether subsidies to private medical insurance are self-financing in countries where public and private insurance coexist and the latter covers the same treatments as the former. We construct a simulation routine based on a micro-econometric discrete choice model that allows us to evaluate the impact of premium changes on the utilization of outpatient and inpatient health care services. As an application, we estimate the budgetary effects of scrapping a subsidy from the purchase of individual private policies, using micro-data from Catalonia. Our results suggest that the subsidy is not self-financing. This result is driven by the fact that private medical insurance holders make concurrent use of public and private services, and by the price inelasticity of the demand for private policies.     

Health insurance and health services utilization in Ireland

The numbers buying private health insurance in Ireland have continued to grow, despite a broadening in entitlement to public care. About 40% of the population now have insurance, although everyone has entitlement to public hospital care. In this paper, we examine in detail the growth in insurance coverage and the factors underlying the demand for insurance. Attitudinal responses reveal the importance of perceptions about waiting times for public care, as well as some concerns about the quality of that care. Individual characteristics, such as education, age, gender, marital status, family composition and income all influence the probability of purchasing private insurance. We also examine the relationship between insurance and utilization of hospital in-patient services. The positive effect of private insurance appears less than that of entitlement to full free health care from the state, although the latter is means-tested, and may partly represent health status.     

Inequities in access to medical care in five countries: findings from the 2001 Commonwealth Fund International Health Policy Survey

OBJECTIVE: To examine across five countries inequities in access to health care and quality of care experiences associated with income, and to determine whether these inequities persist after controlling for the effect of insurance coverage, minority and immigration status, health and other important co-factors. DESIGN: Multivariate analysis of a cross-sectional 2001 random survey of 1400 adults in five countries: Australia, Canada, New Zealand, United Kingdom, and United States. MAIN OUTCOME MEASURES: Access difficulties and waiting times, cost-related access problems, and ratings of physicians and quality of care. RESULTS: The study finds wide and significant disparities in access and care experience between US adults with above and below-average incomes that persist after controlling for insurance coverage, race/ethnicity, immigration status, and other important factors. In contrast, differences in UK by income were rare. There were also few significant access differences by income in Australia; yet, compared to UK, Australians were more likely to report out of pocket costs. New Zealand and Canada results fell in the mid-range of the five nations, with income gaps most pronounced on services less well covered by national systems. In the four countries with universal coverage, adults with above-average income were more likely to have private supplemental insurance. Having private insurance in Australia, Canada, and New Zealand protects adults from cost-related access problems. In contrast, in UK having supplemental coverage makes little significant difference for access measures. Being uninsured in US has significant negative consequences for access and quality ratings. CONCLUSIONS: For policy leaders, the five-nation survey demonstrates that some health systems are better able to minimize among low income adults financial barriers to access and quality care. However, the reliance on private coverage to supplement public coverage in Australia, Canada, and New Zealand can result in access inequities even within health systems that provide basic health coverage for all. If private insurance can circumvent queues or waiting times, low income adults may also be at higher risks for non-financial barriers since they are less likely to have supplemental coverage. Furthermore, greater inequality in care experiences by income is associated with more divided public views of the need for system reform. This finding was particularly striking in Canada where an increased incidence of disparities by income in 2001 compared to a 1998 survey was associated with diverging views in 2001.     

Health care services utilization and access inequalities in the Sao Paulo Metropolitan Region

This paper presents case study findings in five municipalities in the S?o Paulo Metropolitan Region. Inequalities in access to health care services and their utilization were described through advanced tabulation data from the 1998 SEADE Life Conditions Survey. The variables analyzed were: owning or not owning private health care insurance, income and age brackets. The health care service attributes studied were: health care services coverage by a health insurance plan, health services demands and average waiting time to receive health care. Compared with other studies, using the 1998 IBGE PNAD, the results allowed us to confirm interregional imbalances which can only be detected in shorter special scale studies: the municipalities. Despite showing the high private health insurances coverage the S?o Paulo Metropolitan Region has a great inner heterogeneity. The inequalities in private health care insurance, access, waiting time, and type of insurance coverage were observed through income quintiles and age classes analyses. Findings suggest that an expansion of the State's regulation capacity is necessary in order to empower the Brazilian Health Care System principles of universality and equity to be qualified to offer Brazilians the right to access health care services.     

Factors affecting the supply of private hospital beds in the UK: private insurance, NHS pay beds, or NHS waiting list?

This study attempts to isolate the determinants of private hospital growth in the United Kingdom. Thirty-six variables, representing private medicine, the socio-economic environment, the political and government conditions, and the health care systems characteristics were selected for analysis. Multiple regression analysis shows that the number of independent hospital beds in the UK can be explained almost entirely by the number of persons with private health insurance, the number of NHS pay beds, and the overall bed level. Further analysis reveals that the number of persons with private health insurance can be explained to a large extent by the length of the NHS waiting list.     

Choices in health care: the European experience

This paper examines some policies to increase or restrict consumer choice in western European health systems as regards four decisions: choice between public and private insurance; choice of public insurance fund; choice of first contact care provider and choice of hospital. Choice between public and private insurance is limited and arose for historical reasons in Germany. Owing to significant constraints, few people choose the private option. Choice of public insurance fund tends to be exercised by younger and healthier people, the decision to change fund is mainly associated with price and, despite complex risk adjustment mechanisms, it has led to risk selection by funds. Choice of first contact care provider is widespread in Europe. In countries where choice has traditionally been restricted, reforms aim to make services more accessible and convenient to patients. Reforms to restrict direct access to specialists aim to reduce unnecessary and inappropriate care but have been unpopular with the public and professionals. Patients' take up of choice of hospital has been surprisingly low, given their stated willingness to travel. Only where choice is actively supported in the context of long waiting times is take up higher. The objectives, implementation and impact of policies about choice have varied across western Europe. Culture and embedded norms may be significant in determining the extent to which patients exercise choice.     

The effect of a private sector on the waiting time in national health service

This article examines the effect of a private sector on the waiting time associated with treatment in a public hospital. Without rationing of waiting-list admissions, a private sector is shown to result in a longer waiting time if the demand for a public treatment is sufficiently elastic with respect to the waiting time. When waiting-list admissions are rationed, the waiting time is shown to increase if the public sector consultants are permitted to work in the private sector in their spare time.     

Private healthcare. Let's drink to that

The Commission for Health Improvement will have authority to monitor private hospitals treating NHS patients. The private sector will be subject to the NHS complaints procedure. The issue of medical staffing for private hospitals needs to be addressed. The uneven spread of private facilities across the country undermines the partnership. Arrangements to cut NHS waiting lists will reduce demand for private medical insurance.     

Tackling excessive waiting times for elective surgery: a comparative analysis of policies in 12 OECD countries

This paper compares policies to tackle excessive waiting times for elective surgery in 12 OECD countries. It is found that waiting times may be reduced by acting on the supply of or on the demand for surgery (or both). On the supply side, evidence suggests that both capacity and financial incentives towards productivity can play an important role. On the demand side, inducing a raising of clinical thresholds may reduce waiting times but may also provoke tension between clinicians and policy makers. Preliminary evidence also suggests that an increase in private health insurance coverage may reduce waiting times.     

Employee demand for health insurance and employer health plan choices

Although most private health insurance in US is employment-based, little is known about how employers choose health plans for their employees. In this paper, I examine the relationship between employee preferences for health insurance and the health plans offered by employers. I find evidence that employee characteristics affect the generosity of the health plans offered by employers and the likelihood that employers offer a choice of plans. Although the results suggest that employers do respond to employee preferences in choosing health benefits, the effects of worker characteristics on plan offerings are quantitatively small.