Discrimination in a universal health system: explaining socioeconomic waiting time gaps.

One of the core goals of a universal health care system is to eliminate discrimination on the basis of socioeconomic status. We test for discrimination using patient waiting times for non-emergency treatment in public hospitals. Waiting time should reflect patients' clinical need with priority given to more urgent cases. Using data from Australia, we find evidence of prioritisation of the most socioeconomically advantaged patients at all quantiles of the waiting time distribution. These patients also benefit from variation in supply endowments. These results challenge the universal health system's core principle of equitable treatment.

Waiting times for elective surgery and the decision to buy private health insurance.

More than 45% of Australians buy health insurance for private treatment in hospital. This is despite having access to universal and free public hospital treatment. Anecdotal evidence suggests that avoidance of long waits for public treatment is one possible explanation for the high rate of insurance coverage. In this study, we investigate the effect of waiting on individual decisions to buy private health insurance. Individuals are assumed to form an expectation of their own waiting time as a function of their demographics and health status. We model waiting times using administrative data on the population hospitalised for elective procedures in public hospitals and use the parameter estimates to impute the expected waiting time and the probability of a long wait for a representative sample of the population. We find that expected waiting time does not increase the probability of buying insurance but a high probability of experiencing a long wait does. On average, waiting time has no significant impact on insurance. In addition, we find that favourable selection into private insurance, measured by self-assessed health, is no longer significant once waiting time variables are included. This result suggests that a source of favourable selection may be aversion to waiting among healthier people.

Horizontal inequities in Australia's mixed public/private health care system.

Recent comparative evidence from OECD countries suggests that Australia's mixed public-private health system does a good job in ensuring high and fairly equal access to doctor, hospital and dental care services. This paper provides some further analysis of the same data from the Australian National Health Survey for 2001 to examine whether the general finding of horizontal equity remains when the full potential of the data is realized. We extend the common core cross-country comparative analysis by expanding the set of indicators used in the procedure of standardizing for health care need differences, by providing a separate analysis for the use for general practitioner and specialist care and by differentiating between admissions as public and private patients. Overall, our analysis confirms that in 2001 Medicare largely did seem to be attaining an equitable distribution of health care access: Australians in need of care did get to see a doctor and to be admitted to a hospital. However, they were not equally likely to see the same doctor and to end up in the same hospital bed. As in other OECD countries, higher income Australians are more likely to consult a specialist, all else equal, while lower income patients are more likely to consult a general practitioner. The unequal distribution of private health insurance coverage by income contributes to the phenomenon that the better-off and the less well-off do not receive the same mix of services. There is a risk that - as in some other OECD countries - the principle of equal access for equal need may be further compromised by the future expansion of the private sector in secondary care services. To the extent that such inequalities in use may translate in inequalities in health outcomes, there may be some reason for concern.

Deriving welfare measures from discrete choice experiments: inconsistency between current methods and random utility and welfare theory.

Discrete choice experiments (DCEs) are being used increasingly in health economics to elicit preferences for products and programs. The results of such experiments have been used to calculate measures of welfare or more specifically, respondents' 'willingness to pay' (WTP) for products and programs and their 'marginal willingness to pay' (MWTP) for the attributes that make up such products and programs. In this note we show that the methods currently used to derive measures of welfare from DCEs in the health economics literature are not consistent with random utility theory (RUT), or with microeconomic welfare theory more generally. The inconsistency with welfare theory is an important limitation on the use of such WTP estimates in cost-benefit analyses. We describe an alternative method of deriving measures of welfare (compensating variation) from DCEs that is consistent with RUT and is derived using welfare theory. We demonstrate its use in an empirical application to derive the WTP for asthma medication and compare it to the results elicited from the method currently used in the health economics literature.

Moral hazard and adverse selection in Australian private hospitals: 1989-1990.

The Australian hospital system is characterized by the co-existence of private hospitals, where individuals pay for services and public hospitals, where services are free to all but delivered after a waiting time. The decision to purchase insurance for private hospital treatment depends on the trade-off between the price of treatment, waiting time, and the insurance premium. Clearly, the potential for adverse selection and moral hazard exists. When the endogeneity of the insurance decision is accounted for, the extent of moral hazard can substantially increase the expected length of a hospital stay by a factor of up to 3.