Private Voluntary Insurance Research Articles

Basic versus supplementary health insurance: Access to care and the role of cost effectiveness

In a model where patients face budget constraints that make some treatments unaffordable without health insurance, we ask which treatments should be covered by universal basic insurance and which by private voluntary insurance. We argue that next to cost effectiveness, prevalence is important if the government wants to maximize the welfare gain that it gets from its health budget. Conditions are derived under which basic insurance should cover treatments that are mainly used by high risk agents with low income.

Basic versus Supplementary Health Insurance: The Role of Cost Effectiveness and Prevalence

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