DP10233 Basic versus supplementary health insurance: the role of cost effectiveness and prevalence

Author(s): Jan Boone
Publication Date: November 2014
Keyword(s): access to care, cost effectiveness, public vs private insurance, universal basic health insurance, voluntary supplementary insurance
JEL(s): D82, H51, I13, I14
Programme Areas: Public Economics, Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=10233

In a model where patients face budget constraints that make some treatments unaffordable, we ask which treatments should be covered by universal basic insurance and which by private voluntary insurance. We argue that both cost effectiveness and prevalence are important if the government wants to maximize the health gain that it gets from its health budget. In particular, basic insurance should cover treatments that are used by people who at the margin buy treatments that are highly cost effective. This is not the same as covering treatments that are themselves highly cost effective