Royal Economic Society Annual Conference 2004
June 1, 2004
This paper examines the determinants of demand for private medical insurance in Great Britain using data from the British Household Panel Survey (BHPS). The main focus is the impact of quality and supply of public health care and the availability of private alternatives on demand. The personal characteristics that determine the demand for private medical insurance are also investigated. The empirical analysis uses a random effects probit model to investigate the individual purchase decision using a six-year panel from the BHPS. The results here suggest that income, age, sex, political party support and employment status are key determinants of the demand for private medical insurance as are being a smoker and living in an owner occupied house. The key findings are that regional waiting lists and public expenditure on health are significant determinants of the demand for private medical insurance indicating that recent increases in health expenditure and reductions in waiting lists may have crowded out some private insurance.