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Demand for private health insurance: Is there a quality gap?

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Abstract
Quality of care is qualified as a main determinant of the demand for voluntary private health insurance (PHI) in National Health Systems (NHS). This paper provides new evidence on the influence of the quality gap between public and private health insurance and other demand determinants in the demand for PHI in Catalonia. The demand for PHI is modelled as a demand for health care quality. Unlike previous studies, the database employed allows for the development of a link between the theoretical and the empirical model dealing with unobserved heterogeneity and endogeneity issues. Results suggest that a rise in PHI quality enhances an equivalent influence in the demand for PHI as an equal reduction of NHS quality. Income and price elasticity estimates are consistent with the observed feature that PHI appears to be a luxury good and individuals tend to be relatively insensible to tax relief's and monetary co-payments in insurance contracts.

Suggested Citation

  • Joan Costa & Jaume Garcia, 2001. "Demand for private health insurance: Is there a quality gap?," Working Papers, Research Center on Health and Economics 531, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfses:531
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    Cited by:

    1. Meliyanni Johar & Glenn Jones & Michael Keane & Elizabeth Savage & Olena Stavrunova, 2010. "Waiting times and the decision to buy private health insurance. CHERE Working Paper 2010/9," Working Papers 2010/9, CHERE, University of Technology, Sydney.
    2. Meliyanni Johar & Glenn Jones & Michael Keane & Elizabeth Savage & Olena Stavrunova, 2010. "The demand for private health insurance: do waiting lists or waiting times matter? CHERE Working Paper 2010/8," Working Papers 2010/8, CHERE, University of Technology, Sydney.
    3. Ángel López-Nicolás & Marcos Vera-Hernández, 2002. "Are tax subsidies for private medical insurance self-financing? Evidence from a microsimulation model for outpatient and inpatient episodes," Working Papers, Research Center on Health and Economics 632, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2004.
    4. Makoka, Donald & Kaluwa, Ben & Kambewa, Patrick, 2007. "The Demand for Private Health Insurance in Malawi," MPRA Paper 4974, University Library of Munich, Germany.
    5. Randall Ellis & Elizabeth Savage, 2008. "Run for cover now or later? The impact of premiums, threats and deadlines on private health insurance in Australia," International Journal of Health Economics and Management, Springer, vol. 8(4), pages 257-277, December.
    6. Marisol Rodríguez & Alexandrina Stoyanova, 2006. "Changes in the demand for private medical insurance following a shift in tax incentives," Working Papers CREAP2006-12, Xarxa de Referència en Economia Aplicada (XREAP), revised Dec 2006.
    7. López Nicolás, Ángel & Vera-Hernández, Marcos, 2008. "Are tax subsidies for private medical insurance self-financing? Evidence from a microsimulation model," Journal of Health Economics, Elsevier, vol. 27(5), pages 1285-1298, September.

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    More about this item

    Keywords

    Private health insurance; health care quality; insurance premium;
    All these keywords.

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • G1 - Financial Economics - - General Financial Markets

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