اندازه گیری اثرات کاهش یارانه برای بیمه خصوصی در هزینه های عمومی برای مراقبت های بهداشتی

This paper investigates the effects of reducing subsidies for private health insurance on public sector expenditure for hospital care. An econometric framework using simultaneous equation models is developed to analyse the interrelated decisions on the intensity and type of health care use and private insurance. The framework is applied to the context of the mixed public–private system in Australia. The simulation projections show that reducing premium subsidies is expected to generate net cost savings. This arises because the cost savings achieved from reducing subsidies are larger than the potential increase in public expenditure on hospital care.

In many modern economies, the public sector plays an important role in the financing of health care. Nearly all OECD countries have universal health systems, where health care is funded either through taxation, or through publicly-sponsored or subsidised health insurance. Even in the market-oriented health system of the United States, health insurance is directly subsidised for individuals and families with low incomes and the elderly, while employment-based private health insurance is indirectly subsidised through the tax system. The extent of public involvement on health care financing in the United States is expected to rise with the implementation of the Patient Protection and Affordable Care Act which aims to ensure that all individuals have health insurance through a combination of mandates, premium regulations and subsidies. While there are generally strong justifications for the provision of subsidies for health care and health insurance, the arguments for subsidising duplicate private health insurance (PHI) in countries with universal health systems are less compelling. In these countries (e.g. Australia, Spain, United Kingdom), a private health care market coexists alongside the public sector providing health services already covered under the public system. Public subsidies for private insurance, either in the form of tax incentives or monetary rebates on premiums, have been a source of policy contention (Colombo and Tapay, 2004). It is often argued that incentives for PHI can stimulate the private health care market, relieving both capacity and cost pressures off the public system, and improving access to and quality of public sector care. However, questions have been raised as to whether an expanding private sector diverts valuable resources away from the public sector. In addition, issues of equity arise as privately insured individuals, who usually have higher incomes, can bypass the public sector queues and obtain faster access to care. An important question in evaluating the effectiveness of subsidies for duplicate PHI is whether subsidies are self-financing – if its introduction would lead to cost savings within the public health care system that exceed the cost of the subsidy program. The converse question, one that is pursued in this paper, is whether public savings achieved from reducing subsidies can more than offset the potential increase in public expenditure. Understanding the costs and benefits of subsidy programs for private insurance is important as it apprises the effectiveness of policy instruments avail to governments seeking to influence the public and private composition of health expenditures. This is especially relevant as policy makers look towards sources of private finance to pay for the health care demands of their populace in the face of rapidly growing public spending. A number of studies have examined the self-financing nature of subsidies for private insurance. Emmerson et al. (2001) and Frech and Hopkins (2004) investigate this issue through an ex-post policy evaluation for the United Kingdom and Australia respectively. The studies conclude that the cost of subsidising PHI exceeds the fiscal benefits on the public sector. López Nicolás and Vera-Hernández (2008), through an ex-ante policy simulation, arrive at a similar conclusion when simulating the effects of abolishing tax subsidies for private insurance in Spain. In addition to the significant cost involved in subsidising PHI, Colombo and Tapay (2004) highlight two other reasons why duplicate PHI is expected to have little cost-shifting effects (pp. 193 and 194). Firstly, relative to the public sector, the private health care sector usually focusses on elective treatments for patients with less complex and severe medical conditions. Secondly, privately insured individuals can continue to utilise the public sector. Following this, a question that is central to the debate is whether privately insured individuals ‘opt out’ of the public system by substituting private for public health care, or ‘top up’ and enlarge their use of health care without reducing their reliance on the public system (Fabbri and Monfardini, 2011). This paper contributes to the literature investigating the self-financing nature of PHI subsidies. It develops a microeconometric framework to analyse the interrelated decisions on the intensity and type of health care use and PHI. The framework builds on the work by López Nicolás and Vera-Hernández (2008) who construct a discrete choice model to analyse the (binary) decisions surrounding public and private health care use and private insurance. The framework proposed here comprises of three simultaneous equation models which accommodate the count data nature of the health care utilisation measures (number of hospital admissions, length of overnight stay) and the binary nature of the measures of the type (public vs. private) of hospital care and PHI. The econometric framework is applied to the context of the mixed public and private health system in Australia. Australia is an interesting case study for examining the self-financing hypothesis. In the late 1990s a series of policy measures was introduced in the PHI market within a short time frame to encourage the purchase of private insurance. These measures include a tax penalty on high income individuals without private health cover, a generous 30 percent rebate on premiums, and the introduction of entry-age adjusted premiums. To evaluate the self-financing nature of PHI, the estimates from the econometric models are used in an ex-ante simulation analysis in which the premium rebates are scaled back. This study combines two themes within the literature on the economics of health care and health insurance. The first concerns the effects of tax subsidies on the demand for health insurance, for which there have been considerable research in the United States (e.g. Gruber and Poterba, 1994; Gruber and Washington, 2005) and Canada (e.g. Stabile, 2001; Finkelstein, 2002). These studies, like most program evaluation research, focus on the ex-post evaluation of a policy or program. They exploit variation in the insurance price that arises from changes in the tax treatment on premiums and benefits affecting only a part of the population (e.g. defined by occupation types or geography), and examine how demand has changed relative to a subpopulation or ‘control group’ not affected by the policy change. While this treatment-control approach has its merits, it is not always feasible. For many important applications, it is often the case that the policy of interest affects the entire population, or that a comparable ‘control group’ is not available. In some instances, a series of policies could have been introduced either concurrently or in close succession, as in the case of the PHI market in Australia, for which isolating the effects of a particular policy is difficult. Another limitation of the ex-post analytical techniques is that they do not allow the evaluation of the impacts of policies prior to their implementation. It is often important for governments to be able to assess the expected impacts, and costs, arising from a range of hypothetical policy options, hence facilitating the optimal design of policies to achieve the outcomes desired (Todd and Wolpin, 2006). The second theme concerns the determinants of the demand for PHI, and the relationship between private insurance and health care use in the context of a National Health Service. On the former, the literature emphasises the role of public sector waiting times and quality, household income, and education attainment as important determinants of the decision to purchase PHI (see Barros and Siciliani (2012) for a comprehensive review). There is evidence from a variety of countries that individuals with private insurance consume more public and private health care.1 In these studies, a key methodological issue that has to be addressed is that health insurance status is potentially endogenous to health care use, which arises as a result of the interdependency in the decisions to insure, and to consume health care (Cameron et al., 1988). The endogeneity problem is addressed using three simultaneous equation models that accommodate the mixed count-binary nature of the utilisation, type and insurance outcome variables. Traditional workhorse models for non-negative and integer-valued (count) outcomes such as the Poisson and Negative Binomial models have been extended to more advanced models with a variety of applications such as the multivariate count data models (e.g. Munkin and Trivedi, 1999; Fabbri and Monfardini, 2009; Hellström, 2006), and count data models as a system of simultaneous equations (Deb and Trivedi, 2006; Atella and Deb, 2008; Cheng and Vahid, 2011). A novel econometric model developed in this paper is a bivariate lognormal Poisson model with a common endogenous binary regressor, used to jointly analyse two hospital care utilisation measures (number of day and overnight hospital admissions) and the decision to purchase PHI. This novel model contributes to the growing literature on multivariate simultaneous equation count data models.

Policy incentives such as premium or tax rebates for duplicate private health insurance are often justified based on the argument that private financing can relieve cost and capacity pressures on the public system. This paper investigates the question of whether cost savings that are achieved from reducing subsidies for private health insurance outweigh the potential increase in public expenditure on hospital care in the context of the Australian health care system. The study develops a microeconometric framework to analyse the effect of policy incentives on the decision to buy private health insurance, and the effect of private insurance on the decisions of whether to obtain hospital care from the public or private sector, and how much care to consume. The econometric estimates are used in a simulation analysis to assess whether reducing premium rebates on private health insurance in Australia is likely to generate net cost savings to the public budget. The econometric results indicate that individuals with private health insurance are more likely to seek hospital care as a private patient compared to those without private insurance. However, the intensity of hospital admissions and length of overnight stay do not differ between the insured and uninsured groups. The estimates of the elasticity of demand for private insurance are in the range of −0.32 to −0.35. The simulation projections show that reducing premium subsidies is expected to generate net cost savings to the public budget. This result is obtained in all 5 different simulation scenarios that are considered, and is robust to different methods used to account for uncertainty in the projections. To illustrate, a 10 percent reduction in rebates for instance is projected to lead to an increase in public expenditure that is either not statistically different from zero, or substantially smaller than the cost savings achieved through lower spending on premium subsidies. The estimates of the price elasticity and the simulation results are mostly robust to different approaches used to formulate the insurance price. For example, using predicted premiums in placed of observed premiums, and accounting for entry-age rating through the Lifetime Health Cover policy produce elasticity estimates that are very similar. Although the cost projections from the simulation analysis vary slightly by the estimation strategies used to address potential endogeneity problems, the conclusion that reducing subsidies generate cost savings remains unchanged. A question that naturally arises is whether the simulation results are driven primarily by the inelastic demand for private insurance, or whether it is due to the differential rates of hospital care use by the insured and uninsured groups. The simulation projections indicate that the frequency of hospital admissions and the number of hospital nights remain unchanged when the proportion of privately insured individuals decreases. This suggests that differences in utilisation across the insured and uninsured groups are not the reason why cost savings occur. It is also not the case that individuals continue to use private hospital services despite dropping private health insurance cover. The inelastic demand is the main reason for the cost savings, as only a small fraction of individuals are likely to respond to the higher prices for insurance by dropping private health coverage. This conclusion is consistent with previous studies by Emmerson et al. (2001) and Frech and Hopkins (2004), who both show that the price elasticity needs to be substantially higher for private health insurance subsidies to be self-financing. The estimates of the demand elasticity for private insurance obtained in this study is broadly comparable with those from previous Australian studies. Butler (1999) for instance uses a similar definition of the insurance price and obtained a price elasticity estimate of −0.44 for hospital cover. This study is based on data that predates the policy reform when financial incentives were introduced. It is conceivable that consumers are more responsive to price changes back then, in the absence of the tax levy that penalises high income individuals without private insurance. Frech III et al. (2003) use time series data and model the spike in private health insurance coverage in the Australia population following the introduction of the 30 percent rebate and obtained a price elasticity estimate of −0.37, which is very similar to those in this study. In a recent study, Ellis and Savage (2008) use survey data from the post-reform period and obtained elasticity estimates with respect to premiums of −0.6 for singles and −0.4 for families. In this paper, using the method by Ellis and Savage (2008) to incorporate entry-age rating produces elasticity estimates in the range of −0.33 to −0.36, which are quite similar to their estimate for families. This is interesting to note that the estimates of the price elasticities for duplicate and supplementary PHI are broadly comparable internationally (e.g. −0.5 in UK and Spain (King and Mossialos, 2005; López Nicolás and Vera-Hernández, 2008), −0.4 to −0.49 in Canada (Stabile, 2001; Finkelstein, 2002)). Obviously, differences in definitions and empirical methods may limit comparability. Notwithstanding, the slightly smaller elasticity estimates obtained in this paper are likely due to the tax levy and the entry-age rating policy in Australia. What follows is that individuals, particularly those with high incomes, have considerable financial incentives to take up or maintain private insurance cover even in the face of premium increases. It is important to highlight that the results in this paper may not be generalisable, and do not necessarily imply that reducing subsidies on private health insurance would generate cost savings in other countries. This is because the Australian context is unique in that a series of three different policy incentives exists to encourage individuals to buy private health insurance. Reducing the premium subsidy may have little effect given that individuals would still have considerable financial incentives to buy private health insurance because of the tax levy and entry-age premium adjustments. With further cost pressures on public health care budgets, interest in a greater role of private financing is only likely to increase. Two follow-on questions that are open for further research arise from this study. First, what are the alternative measures that are available to policy makers seeking to expand the role of private financing? Second, how do these measures compare in terms of their costs and effectiveness in achieving the stated health policy goals? These are some important questions that would inform the debate surrounding the appropriate roles and relative sizes of the public and private sectors for health care.