This paper presents probit estimates of household utilization of health care facilities in the Philippines. Using household data from the 1987 National Health Survey and supply data from the Department of Health, separate probit equations are estimated for each of the four major types of facilities in the Philippines: Public hospitals, private hospitals, major rural health units and barangay (village) health stations. The probability that a household will utilize services from these facilities is estimated as a function of socioeconomic, demographic and supply variables. The results indicate substantial differences in utilization patterns by income class. Households in the highest income quartile are approximately twice as likely (0.451 versus 0.236) to utilize private hospital services vis-à-vis households in the lowest income quartile, ceteris paribus. The results also indicate substantial substitution between public and private. services. An increase in the availability of private hospital beds significantly reduces the probability that a household will utilize government facilities.
The optimal public insurance-taxation scheme is derived for a model with unobservable outcomes. If the government can only observe aggregate commodity expenditures, reimbursement insurance is constrained-efficient. However, two distortions accompany the reimbursement scheme. First, consumers are induced to take (forego) actions which increase (decrease) the likelihood of adverse outcomes (i.e., ex ante moral hazard). Second, reimbursement insurance creates a subsidy distortion (i.e., ex post moral hazard). Ex ante moral hazard calls for taxation (subsidization) of commodities which increase (decrease) the probability of adverse outcomes. The second distortion calls for taxation (subsidization) of commodities which are sufficiently strong complements to (substitutes for) the insured commodity. An example centered on cigarettes and medical insurance is presented.
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