Using a panel of Australian data and OLS regression, I estimate a 28.5 percent level of demand for private health insurance in Alberta and present a theoretical model of utility analysis to describe the requisite conditions for a successful private health market. My analysis indicates the demand for private health insurance in Alberta would be price and income inelastic; limiting government's ability to affect health insurance purchase decisions. Moreover, a quality gap would have to exist between private and public health goods for a private health market to be successful. The modeled annual private health insurance premium of $826, applicable to the 28.5 percent demand estimate, would not cover costs, requiring significant government subsidization. My conclusion is caution must be exercised before any steps are made towards a private health care market in Alberta as demand may not be sufficient to support a self-financing private health market.
Bibliography: p. 42-47