The Public-Private Mix in the Modern Health Care System - Concepts, Issues, and Policy Options Revisited
NBER Working Paper No. 7881
Private financing of care can make universal entitlement to care more comprehensive' and complete.' The possible combination -- at the point of service provision -- of privately acquired entitlement with the public entitlement, can impinge, however, upon the goals (e.g. improved health, equity, cost containment, care production efficiency, and client satisfaction from service) of the publicly supported health system. The potential to achieve these goals is at greatest risk in the combined system' (e.g., Australia) where, contrary to the segregated system' (e.g., Canada), the same providers are sanctioned to provide medical care under both private and public contracts. A combined system may be inevitable, however, for both economic and political reasons, especially where medical resources are relatively scarce. In this case, the Emerging Paradigm in health systems can offer the best possible solution to the public-private mix issue. In this paradigm, budget-holding institutions, intermediaries between financing entities and providers, organize and manage the consumption of care (OMCC) under public entitlement. The OMCC institutions can offer private insurance, to supplement to the public insurance', but supervise separate groups of providers, those working under public contracts and those working under private.