In a model where patients face budget constraints that make some treatments unaffordable without health insurance, we ask which treatments should be covered by universal basic insurance and which by private voluntary insurance. We argue that next to cost effectiveness, prevalence is important if the government wants to maximize the welfare gain that it gets from its health budget. Conditions are derived under which basic insurance should cover treatments that are mainly used by high risk agents with low income. (C) 2018 Elsevier B.V. All rights reserved.
- Universal basic health insurance
- Voluntary supplementary insurance
- Public vs private insurance
- Access to care
- Cost effectiveness
- Moral hazard
- Adverse selection