Basic versus Supplementary Health Insurance: The Role of Cost Effectiveness and Prevalence
CentER Discussion Paper No. 2014-065
37 Pages Posted: 30 Oct 2014
Date Written: October 24, 2014
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.
Keywords: universal basic health insurance, voluntary supplementary insurance, public vs private insurance, access to care, cost effectiveness
JEL Classification: I13, I14, D82, H51
Suggested Citation: Suggested Citation