Imputing the Social Value of Public Health Care: a New Method with Application to Israel

Yerushalmi, Erez and Ziv, Sani (2020) Imputing the Social Value of Public Health Care: a New Method with Application to Israel. Working Paper 4. Centre for Applied Finance and Economics (CAFE), Birmingham City Business School, Birmingham City University. (Unpublished)

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Abstract

Pre-COVID 19, countries with universal health care have experienced a rising demand for health care services without a corresponding rise in public supply. This has led to a debate on whether to increase private health care services - especially in hospitals and second-tier health care. Proponents for increasing private health care highlight gains in efficiency and innovation, while opponents emphasize its risk to social welfare. However, the monetary value of these gains and losses is seldom quantified. In this paper, we contribute to the debate by imputing the social value of public health care, which does not have a market and therefore cannot be monetized. Similar to contingent valuation methods that use hypothetical markets, we incorporate a hypothetical health care market into a general equilibrium model. Social value is modeled as a byproduct of health care services and enters a well-being household function. The model is calibrated to our unique Health Social Accounting Matrix of Israel. Using a Monte-Carlo method, we impute the minimum social value at around 26% of public health care financing. We furthermore simulate health care scenarios that internalize the social value to show that when assessing the best type, policymakers should weigh the economic gains of deregulation against the lost social value. We show that well-being may decrease in some cases from over-privatization.

Item Type: Monograph (Working Paper)
Identification Number: 4
Date: 22 September 2020
Uncontrolled Keywords: Contingent Valuation Method (CVM), General Equilibrium Model, Hypothetical labor market, Private-public health care, Social value of public health care, Israel
Subjects: A100 Pre-clinical Medicine
A400 Clinical Dentistry
L100 Economics
Divisions: Faculty of Business, Law and Social Sciences > Birmingham City Business School > Department of Accounting, Finance and Economics
Faculty of Business, Law and Social Sciences > Birmingham City Business School > Centre for Applied Finance and Economics
Depositing User: Erez Yerushalmi
Date Deposited: 24 Sep 2020 12:15
Last Modified: 24 Sep 2020 12:15
URI: http://www.open-access.bcu.ac.uk/id/eprint/9935

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