Ramsey waits: allocating public health service resources when there is rationing by waiting.
The optimal allocation of a public health care budget across treatments must take account of the way in which care is rationed within treatments since this will affect their marginal value. We investigate the optimal allocation rules for public health care systems where user charges are fixed and care is rationed by waiting. The optimal waiting time is higher for treatments with demands more elastic to waiting time, higher costs, lower charges, smaller marginal welfare loss from waiting by treated patients, and smaller marginal welfare losses from under-consumption of care. The results hold for a wide range of welfarist and non-welfarist objective functions and for systems in which there is also a private health care sector. They imply that allocation rules based purely on cost effectiveness ratios are suboptimal because they assume that there is no rationing within treatments.
Gravelle
Hugh
H
National Primary Care Research and Development Centre, Centre for Health Economics, University of York, York YO10 5D, UK. hg8@york.ac.uk
Siciliani
Luigi
L
D002017:Budgets; D017281:Cost of Illness; D003362:Cost-Benefit Analysis; D017048:Health Care Costs; D015276:Health Care Rationing / Q000191:economics / Q000379:methods*; D006301:Health Services Needs and Demand / Q000706:statistics & numerical data*; D006801:Humans; D017059:Models, Econometric; D017149:Private Sector / Q000191:economics; D011635:Public Health Administration / Q000191:economics / Q000379:methods*; D017150:Public Sector / Q000191:economics; D040841:Resource Allocation / Q000191:economics / Q000379:methods*; D012946:Social Welfare; D014850:Waiting Lists