The dynamics of health care and growth: a model with physician in dual practice

Alpaslan, B, Lim, KY ORCID: https://orcid.org/0000-0003-1978-176X and Song, Y, 2019. The dynamics of health care and growth: a model with physician in dual practice. Canberra, Australia: Centre for Applied Macroeconomic Analysis, Australian National University.

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Abstract

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.

Item Type:	Working paper
Description:	CAMA working paper 5/2019
Creators:	Alpaslan, B., Lim, K.Y. and Song, Y.
Publisher:	Centre for Applied Macroeconomic Analysis, Australian National University
Place of Publication:	Canberra, Australia
Date:	January 2019
ISSN:	2206-0332
Divisions:	Schools > Nottingham Business School
Record created by:	Jonathan Gallacher
Date Added:	01 Mar 2019 09:57
Last Modified:	07 Nov 2019 09:51
URI:	https://irep.ntu.ac.uk/id/eprint/35867

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