PubMed · 15520436
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Eric Helms. 2004-11-02. A lesson from the third year.. https://doi.org/10.7326/0003-4819-141-9-200411020-00021
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This paper studies the interaction between public and private health care provision in a National Health Service (NHS), with free public care and costly private care. The health authority decides whether or not to allow private provision and sets the public sector remuneration. The physicians allocate their time (effort) in the public and (if allowed) in the private sector based on the public wage income and the private sector profits. We show that allowing physician dual practice 'crowds out' public provision, and results in lower overall health care provision. While the health authority can mitigate this effect by offering a higher wage, we find that a ban on dual practice is more efficient if private sector competition is weak and public and private care are sufficiently close substitutes. On the other hand, if private sector competition is sufficiently tough, a mixed system, with physician dual practice, is always preferable to a pure NHS system.
The Oregon Health Plan (OHP) has received national and international attention for rationing medical care based on explicit priorities. However, in recent years OHP has lost substantial enrollment and struggled to live up to its core principles. This paper explores what went wrong in OHP and the implications of Oregon's experience for state-led health reform.
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