Working Paper: CEPR ID: DP10233
Authors: Jan Boone
Abstract: 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: Access to care; Cost effectiveness; Public vs private insurance; Universal basic health insurance; Voluntary supplementary insurance
JEL Codes: D82; H51; I13; I14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Basic insurance should cover treatments used by individuals at the margin buying supplementary insurance (G52) | Prioritization of treatments covered by basic insurance (I13) |
| Cost-effectiveness scores play a role in prioritizing treatments for insurance coverage (H51) | Prioritization of treatments covered by basic insurance (I13) |
| Limited budgets necessitate spending on treatments with high health returns (H51) | Prioritization of treatments covered by basic insurance (I13) |
| Treatments with serious moral hazard issues (G52) | Coverage decisions (G52) |
| Basic insurance should target treatments used by high-risk, low-income individuals (G52) | Effectiveness of resource allocation in health insurance (I13) |