Friday, May 15, 2009

A Welfare Analysis of the Commonwealth Seniors Health Card

It's not real good

Peter Siminski, The Economic Record, Volume 85, Number 269, June 2009 , pp. 164-180(17)


The Commonwealth Seniors Health Card (CSHC) is a key element of a suite of benefits for Australia's `self-funded retirees'. Its main component is a pharmaceutical concession, which is analysed as a form of public health insurance. The utility gain through risk-pooling is found to be negligible under conservative assumptions. The deadweight loss through moral hazard may be considerable. Finally, the CSHC may be seen as an inequitable transfer, because CSHC holders are a particularly wealthy population.