Work detail

Microeconomic Analysis of Demand for Health Care under Publicly Financed Health Care Insurance

Author: Mgr. Lucie Antošová
Year: 2005 - winter
Leaders: doc. Ing. Ondřej Schneider MPhil., Ph.D.
Consultants:
Work type: Economic Policy
Masters
Language: English
Pages: 92
Awards and prizes: M.A. with distinction from the Dean of the Faculty of Social Sciences for an excellent state-final examination performance and for an extraordinarily good masters diploma thesis
Link:
Abstract: The objective of the thesis is to propose, based on microeconomic analysis of demand for health care, a model that would enable us to describe and explain markets for health care services in European countries that are characterized by society’s important discontent over their current state.
The thesis proposes a model of effective demand for health care as an instrument to show that market for health care services with publicly funded health care insurance leads to a loss of consumers’ surplus and therefore also to a decrease in social welfare. Still and all, this loss is not caused by market imperfections, but by rational behavior of health care consumers who maximize their private utility in the presence of a third-party payer. As a benchmark a hypothetical competitive market for health care services without insurance existence is chosen. At the same time, there is proposed a social welfare function, which can be used in case of health care good and which includes, next to the efficiency point of view, also the existence of externalities, both ‘safety’ and ‘caring’ that concerns European social values related to social solidarity.
In the thesis it is demonstrated that introduction of moderate direct payments of consumers for health care services as a complement to publicly funded health care insurance leads to a decrease in loss of consumers’ surplus, and thus implicitly to increase in social welfare, even if controlling for unfavorable decrease of utility from externalities.
Last but not least, the thesis shows that introduction of (regulated) competition on market for health care insurance can contribute to an increase in efficiency of the whole system. The model of effective demand for health care thus theoretically explains the current trend in European health policy.
Downloadable: Lucie Antošová
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