• R Feldman.
• Institute of Health Services Research, University of Minnesota, Minneapolis 55455, USA.
• Health Econ. 1994 Nov 1; 3 (6): 361-72.

AbstractThis paper raises the question of the least-cost institutional mechanism to secure the value of certainty by reducing risk over the purchase of medical care. Two methods of reducing risk are evaluated: financing medical care with 'complete insurance', that is, ready access to medical care that is free at the point of purchase; and rationing by waiting time in a national health service that supplies a limited volume of medical care. The first system corresponds to the type of insurance held by most people in the United States, while the latter represents a stylized model of a national health service. The cost of over-utilization of services by insured consumers in the U.S. is substantial--larger on a per-family basis, and far larger for the nation, than the cost of under-utilization by those who lack insurance. The cost of rationing by waiting is estimated to be between $541 and $828 per family (in 1984 dollars). Thus, both systems involve costly mis-allocation of resources.

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