TITLE:
Effect of user fee on patient’s welfare and efficiency in a two tier health care market
AUTHORS:
Eugenia Amporfu
KEYWORDS:
User Fee; Two Tier Healthcare; Mixed Financing; Prospective Payment; Cost Sharing
JOURNAL NAME:
Health,
Vol.2 No.9,
September
29,
2010
ABSTRACT: This is a theoretical paper examining the effect of user fee on patients’ welfare and social welfare under three forms of provider reimbursements: full cost, prospective payment and cost sharing. The paper extends Rickman and McGuire (1999) by introducing user fee to the public sector and maintaining the assumption that providers can work in both the private and public health sectors. Contrary to previous studies, this study shows that efficiency is possible under the full cost reimbursement. The paper also shows the conditions under which efficiency is possible under each reimbursement scheme. Patient’s welfare can improve with the introduction of user fee when services in the public and private sector are complementary.