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Growth and welfare in mixed health system financing with physician dual practice in a developing economy: a case of Indonesia

Barış Alpaslan (), King Yoong Lim () and Yan Song ()
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Barış Alpaslan: Social Sciences University of Ankara
Yan Song: Nanjing Audit University

International Journal of Health Economics and Management, 2021, vol. 21, issue 1, No 3, 80 pages

Abstract: Abstract Based on Indonesia’s hybrid BPJS Kesehatan health system, we analyze for welfare-optimal government financing strategy in an economy with a mixed health system using an endogenous growth framework with physician dual practice. We find the model solution to produce two vastly different regimes in terms of policy implications: a “high” public-sector congestion regime as in the benchmark case of Indonesia, and a “low” public-sector congestion, high capacity regime. In the former, welfare-optimal health financing strategy appears to be promoting private health service. In contrast, in the low-congestion, high capacity regime, a welfare-optimal strategy is to do the opposite of increasing government physician wage at the expense of private health subsidy. These results highlight the importance of developing a benchmarking system that measures the actual degree of congestion faced by the public health service in a developing economy, as it ultimately would influence the optimal health financing strategy to be pursued.

Keywords: Dual practice; Economic growth; Health care financing; Welfare (search for similar items in EconPapers)
JEL-codes: H51 I11 I15 O41 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s10754-020-09289-9

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