Concerns for Equity and the Optimal Co-Payments for Publicly Provided Health Care



Section 5 we give a discussion of this assumption and of the consequences of
relaxing it.

Denoting the share of the population that is treated by ω(p), the relation-
ship between the size of the co-payment and the tax rate
t and is formally
given by

t(p = π (c - p) ω(p)                          (4)

It follows that

t'(p) = -πω(p) + π (c - p) ω'(p)                    (5)

which is negative since ω'(p) is negative.

If p is sufficiently small, everyone will choose treatment provided I > 0
for everyone. In other words, ω(p) = 1 and
ω'(p) = 0 for sufficiently low
values of p. For sufficiently high values of p, some people will choose not to
be treated, i.e. ω(p) < 1. From (4) and (5) it therefore follows that

t' (p) = π for p so small that ω(p) = 1

(6)


t' (p) < π for p sufficiently close to c

For intermediate values of p, we may very well have t' (p) > 1, since there
is nothing that rules out "large" values of
ω'.

We are now ready to see how the expected utility v(y, £,p) of a particular
person depends on the size of the co-payment. To see this, we distinguish
between those who choose treatment and those who don’t: For those who
choose not to be treated, it follows from (3) that

gv*y, f,p) =      ■      ■ t) > 0                    (7)

op

For these persons (which include those with “low” income if p initially is large
enough), an increase in co-payments is thus unambiguously desirable. The
interpretation is obvious: Since these persons in any case are choosing not to
be treated, they are not directly affected by the increase in the co-payment.



More intriguing information

1. On the Integration of Digital Technologies into Mathematics Classrooms
2. Place of Work and Place of Residence: Informal Hiring Networks and Labor Market Outcomes
3. Migration and employment status during the turbulent nineties in Sweden
4. The name is absent
5. Towards Learning Affective Body Gesture
6. The name is absent
7. The name is absent
8. The name is absent
9. The name is absent
10. The name is absent