In many countries, private and public healthcare systems coexist. However, in recent years, fiscal austerity combined with slow growth has led to dramatic cuts in public healthcare, despite increasing demand due to an aging population and advances in medical technology. As a result, structural supply shortages and longer waiting lists are used as rationing devices. This paper analyzes these issues within an overlapping generations (OLG) model with capital accumulation. Agents consume both private and public healthcare and invest in preventive medicine when young. We first analyze the decentralized economy outcome and then compare it to the Social Planner solutions. Finally, we prove that any Pareto optimum can be decentralized by appropriately managing public debt and healthcare spending.
Should I Wait or Should I Pay? The Dynamics of Private and Public Healthcare
Magris Francesco;Sbaiz Gabriele;Tanasa Bianca
2025-01-01
Abstract
In many countries, private and public healthcare systems coexist. However, in recent years, fiscal austerity combined with slow growth has led to dramatic cuts in public healthcare, despite increasing demand due to an aging population and advances in medical technology. As a result, structural supply shortages and longer waiting lists are used as rationing devices. This paper analyzes these issues within an overlapping generations (OLG) model with capital accumulation. Agents consume both private and public healthcare and invest in preventive medicine when young. We first analyze the decentralized economy outcome and then compare it to the Social Planner solutions. Finally, we prove that any Pareto optimum can be decentralized by appropriately managing public debt and healthcare spending.Pubblicazioni consigliate
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