What should (public) health insurance cover?
In any system of health insurance, a decision must be made about what treatments the insurance should cover. One way to make this decision is to rank treatments by their ratios of health benefits to treatment costs. If treatments that are not offered by the health insurance can be purchased out of pocket, the socially optimal ranking of treatments to be included in the health insurance is different from this standard cost-effectiveness rule. It is no longer necessarily true that treatments should be ranked higher the lower are treatment costs (for given health benefits). Moreover, the larger are the costs per treatment for a given benefit-cost ratio, the higher priority should the treatment be given. If the health budget in a public health system does not exceed the socially optimal size, treatments with sufficiently low costs should not be performed by the public health system if treatment may be purchased privately out of pocket.
Hoel
Michael
M
Department of Economics, University of Oslo, P.O. Box 1095 Blindern, N-0317 Oslo, Norway. mihoel@econ.uio.no
D017048:Health Care Costs; D006801:Humans; D019458:Insurance Coverage / Q000458:organization & administration*; D015233:Models, Statistical; D009664:Norway; D017150:Public Sector