Many governments who have large public health care systems are looking for means to reduce the public's financial burden. One approach is to increase reliance on private health care delivery through expanded private insurance coverage. Using data from Jamaica, the authors estimate models of the demand for medical care. They find that insurance does induce individuals to opt out of the public sector in favor of the higher-quality private sector, thereby reducing total public expenditures on health care. Moreover, since insurance is concentrated among the upper income groups, expanded insurance coverage better targets public expenditures to the poor.
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