Public Provision and Cross-Border Health Care.

We study how the optimal public provision of health care depends on whether or not individuals have an option to seek publicly financed treatment in other regions. We find that, relative to the first-best solution, the government has an incentive to over-provide health care to low-income individuals. When cross-border health care takes place, this incentive is solely explained by that over-provision facilitates redistribution. The reason why more health care facilitates redistribution is that high-ability individuals mimicking low-ability individuals benefit the least from health care when health and labor supply are complements. Without cross-border health care, higher demand for health care among high-income individuals also contributes to the over-provision given that high-income individuals do not work considerably less than low-income individuals and that the government cannot discriminate between the income groups by giving them different access to health care.

Fixed budgets as a cost containment measure for pharmaceuticals.

In Västerbotten County, Sweden, there are two health centers which (in contrast to all other health centers in the region) bear strict responsibility over their pharmaceutical budget. This study examined whether the prices and quantities of pharmaceuticals prescribed by physicians working at these health centers differ significantly from those prescribed by physicians at health centers with open-ended budgets. Estimation results using matching methods, which allows us to compare similar patients at the different health centers, show that the introduction of fixed pharmaceutical budgets did not affect physicians' prescription behavior, indicating that fixed budgets may not be an efficient measure to reduce costs. Another explanation is that the health centers under study already had taken measures to contain costs, making it hard to further reduce costs.