The dynamics of health care and growth: A model with physician in dual practice
King Yoong Lim and
CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University
We present a growth model with micro-foundations of a mixed health care system and physician dual-practice, to analyze for welfare-optimal government financing strategy for a mixed health system in developing countries. Calibrating the model for Indonesia, we find that a government subsidy to private health care is both growth- and welfare-enhancing, whereas it is more effective for the government to invest in health infrastructure instead of a public-sector “rewarding” policy in raising government physicians’ wage if its goal is to improve physician effort in public practice. Indeed, for the “rewarding” policy, a dynamic trade-off in growth is found, which is not previously documented in the literature. We also find the model to produce two regimes with different welfare-optimal health financing (a “normal” regime and a low public-sector congestion regime). In the former, welfare-optimal health financing strategy appears to be promoting private health subsidy at the expense of public-sector physician wages. In the latter, the opposite is welfare-optimal.
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)
Pages: 43 pages
New Economics Papers: this item is included in nep-gro, nep-hea, nep-pbe and nep-sea
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Journal Article: Growth and welfare in mixed health system financing with physician dual practice in a developing economy: a case of Indonesia (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2019-05
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