A Policy Perspective on “Mixed” Health Care Financial Systems

This study examines whether private financing erodes public support for maintaining health care budgets in the public sector. It also examines the hypothesis that private financing reduces the real value of nominal government health care budgets by contributing to higher health care costs. The statistical analysis focuses on a set of OECD countries for the 1980s. The results provide little support for arguments that private financing of health care contributes to reduced access to publicly financed health care. Rather, they lend support to the view that restricting the availability of private health care financing will erode support for public plans that are operating with excess demand. Moreover, results with respect to health care costs are sensitive to the inclusion of the United States in the model.