IAPR TECHNICAL PAPER SERIES

The Alberta government has proposed a greater role for private insurers and health care service providers to increase non-government revenues for health care services to alleviate financial pressures on the public health care system. For any private health care system to bring significant relief to the public system a large enough number of individuals must opt to consume the private good instead of the public good. Based on Australian health insurance data, we estimate that 28.5 % of the Alberta population would purchase private insurance and that the increased revenue from private health care would represent at most 11 % of the 2003-04 budgeted health care expenditures. While the amount of fiscal relief may be small, the movement of individuals whose preferences do not match the public system of health care to the private health system may diffuse political pressures on public health care budgets. This could make it easier for the public system to offer an average quality level of care in the face of a superior quality private health system and it would allow increases in health care costs to be absorbed by private, rather than public, revenu