Uniform pricing and subsidy coordination mechanism in a two‐tier healthcare system under a co‐payment policy

Abstract

Recently, the lengthy waiting time in public hospitals (called the public system) under the free healthcare policy has become a serious problem. To address this issue, motivated by the Japanese healthcare system, this paper investigates a two‐tier co‐payment healthcare system under a uniform pricing and subsidy coordination mechanism. In such a setting, the public system and the private system (i.e., the private hospitals) compete for market share with different objectives, whereas the government uniformly sets the service price and the subsidy rate to maximize social welfare under a total budget constraint. Compared with two free healthcare policy cases implemented in the Canadian and Australian healthcare systems respectively in terms of social welfare, the results show that when the market demand (or the patient service quality sensitivity) is sufficiently high (sufficiently low), the uniform pricing and subsidy coordination mechanism is better and worse otherwise; and when the patient's waiting sensitivity (or the total government budget) is in an appropriate middle range (sufficiently low or high), the mechanism can outperform than the free policy cases.

Service quality attributes on customers’ perceived value and behavioral intention of district health centres: a moderating effect of health-care subsidy

“…Differences in perceptions between health-care subsidy and non-subsidy customers are noted. Health-care subsidies play an important factor in assessing the goal of voucher schemes (health-care prevention and chronic disease management), service quality and effectiveness of DHCs (Chen, 2023; Johnson et al , 2012; Liu et al , 2023; Yam et al , 2019). Furthermore, core services have a negative impact on customer satisfaction.…”

“…Patients compare the cost of health-care services against benefits perceived and conclude patient experience. When customers' service quality sensitivity is high, uniform pricing and subsidy coordination are better (Chen, 2023). Pevec and Pisnik (2018) found a positive impact of patients' perceived price towards their perceived service value.…”

Strategic Queueing Behavior of Two Groups of Patients in a Healthcare System

“…For the first category, the related literature includes Guo et al (2014) [17], Chen et al (2015) [18], Hua et al (2016) [19], Qian and Zhuang (2017) [20], Wan and Wang (2017) [21], [22], Zhang and Yin (2021) [23,24], Zhou et al (2022) [25], Chen (2023) [26], and Hu et al (2024) [27]. In Guo et al (2014) [17], the authors analyzed the pricing and capacity decisions of a two-tier medical service system under the condition of ensuring self-financing.…”

“…Moreover, in Zhou et al (2022) [25], the authors studied a mixed duopoly service system with private and public service providers. In Chen (2023) [26], the author investigated a two-tier co-payment healthcare system under a uniform pricing and subsidy coordination mechanism. In Hu et al (2024) [27], the authors modeled privatized public service systems as queueing systems and displayed whether the government adopting myopic adjustment plays a critical role in choosing the regulation instrument.…”