Growth and welfare in mixed health system financing with physician dual practice in a developing economy: a case of Indonesia

Barış Alpaslan, King Yoong Lim*, Yan Song

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review

    1 Citation (Scopus)

    Abstract

    Based on Indonesia’s hybrid BPJS Kesehatan health system, we analyze for welfare-optimal government financing strategy in an economy with a mixed health system using an endogenous growth framework with physician dual practice. We find the model solution to produce two vastly different regimes in terms of policy implications: a “high” public-sector congestion regime as in the benchmark case of Indonesia, and a “low” public-sector congestion, high capacity regime. In the former, welfare-optimal health financing strategy appears to be promoting private health service. In contrast, in the low-congestion, high capacity regime, a welfare-optimal strategy is to do the opposite of increasing government physician wage at the expense of private health subsidy. These results highlight the importance of developing a benchmarking system that measures the actual degree of congestion faced by the public health service in a developing economy, as it ultimately would influence the optimal health financing strategy to be pursued.

    Original languageEnglish
    Pages (from-to)51-80
    Number of pages30
    JournalInternational Journal of Health Economics and Management
    Volume21
    Issue number1
    DOIs
    Publication statusPublished - Mar 2021

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