Dedicated Doctors: Public and Private Provision of Health Care with Altruistic Physicians

Tinbergen Institute Discussion Paper No. 2007-010/1

33 Pages Posted: 5 Feb 2007

See all articles by Josse Delfgaauw

Josse Delfgaauw

Erasmus University Rotterdam (EUR) - Department of Economics; Tinbergen Institute

Date Written: January 11, 2007

Abstract

Physicians are supposed to serve patients' interests, but some are more inclined to do so than others. This paper studies how the system of health care provision affects the allocation of patients to physicians when physicians differ in altruism. We show that allowing for private provision of health care, parallel to (free) treatment in a National Health Service, benefits all patients. It enables rich patients to obtain higher quality treatment in the private sector. Because the altruistic physicians infer that in their absence, NHS patients receive lower treatment quality than private sector patients, they optimally decide to work in the NHS. Hence, after allowing for private provision, the remaining (relatively poor) NHS patients are more likely to receive the superior treatment provided by altruistic physicians. We also show, however, that allowing physicians to moonlight, i.e. to operate in both the NHS and the private sector simultaneously, nullifies part of these beneficial effects for the poorest patients.

Keywords: Altruism, Health care systems, Subsidy, Moonlighting

JEL Classification: D64, H44, I11, I18

Suggested Citation

Delfgaauw, Josse, Dedicated Doctors: Public and Private Provision of Health Care with Altruistic Physicians (January 11, 2007). Tinbergen Institute Discussion Paper No. 2007-010/1, Available at SSRN: https://ssrn.com/abstract=958693 or http://dx.doi.org/10.2139/ssrn.958693

Josse Delfgaauw (Contact Author)

Erasmus University Rotterdam (EUR) - Department of Economics ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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