THE POLITICAL-ECONOMY OF RATIONING IN SOCIAL HEALTH-INSURANCE

Due to the rapid progress in medical technology social insurance syste ms will soon no longer be able to grant health services without limits but must employ non-price rationing devices. This raises the question how these limits will be determined. Here we consider a direct democr acy where the size of the social health insurance plan is determined i na popular referendum using simple majority rule. Moreover, two differ ent kinds of rationing are distinguished according to whether addition al private purchases of health care are allowed. For both systems we e xamine the size of the social insurance system in a political equilibr ium, and we compare the results in particular with respect to their di stributional effects.