Publicly financed competition in health care delivery: a Canadian simulation model

This paper presents the simulation analysis of a proposal for publicly financed competition in the Canadian health care system. The proposal incorporates cost-conscious consumer choice among alternative delivery modalities within a system of national health insurance. Five model structures for competition are examined using data from a market area in the province of Ontario. The simulation results indicate the potential for competition to have a significant impact on health care expenditure over a range of plausible circumstances. The results also suggest that it may not be necessary to go so far as a system of formal competition in order to achieve much of the potential savings associated with alternative delivery modalities.