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Is there a 'secession of the wealthy'? Private health insurance uptake and National Health System support

Costa-Font, J. and Jofre-Bonet, M. (2008). Is there a 'secession of the wealthy'? Private health insurance uptake and National Health System support. Bulletin Of Economic Research, 60(3), pp. 265-287. doi: 10.1111/j.1467-8586.2008.00285.x

Abstract

The purchase the private health insurance (PHI) as a mean to partially supplement the National Health System (NHS) coverage is often regarded as a potential signal for a declining support for the NHS. To date, the hypothesis that attitudes towards the NHS might be influenced by the uptake of PHI is still open to empirical scrutiny. Exploiting the fact that PHI is typically purchased by the most affluent, in this paper we test the so called ‘secession of the wealthy’ hypothesis whereby the likelihood of expressing “lack of support for the NHS” increases with having supplementary PHI. Using empirical data from Catalonia, we draw upon an empirical strategy that circumvents an obvious simultaneity problem by estimating both a recursive bivariate probit as well as an IV probit. After controlling for insurance premium, household income and other socio-demographic determinants, we find that the purchase of PHI reduces the propensity of individuals to support the NHS. We also find evidence that PHI is a luxury good and that, interestingly, it has a large price elasticity, suggesting the sensitivity of PHI purchase to fiscal incentives.

Publication Type: Article
Additional Information: This is the accepted version of the following article: Costa-Font, J. and Jofre-Bonet, M. (2008), IS THERE A ‘SECESSION OF THE WEALTHY’? PRIVATE HEALTH INSURANCE UPTAKE AND NATIONAL HEALTH SYSTEM SUPPORT. Bulletin of Economic Research, 60: 265–287, which has been published in final form at http://dx.doi.org/10.1111/j.1467-8586.2008.00285.x
Publisher Keywords: private health care, health insurance, NHS reform
Subjects: H Social Sciences > HB Economic Theory
R Medicine > RA Public aspects of medicine
Departments: School of Arts & Social Sciences > Economics
Related URLs:
URI: http://openaccess.city.ac.uk/id/eprint/3927
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