Third degree waiting time discrimination: optimal allocation of a public sector health care treatment under rationing by waiting

In many public health care systems treatment is rationed by waiting time. We examine the optimal allocation of a .xed supply of a treatment between di¤erent groups of patients. Even in the absence of any distributional aims welfare is increased by third degree waiting time discrimination. Because waiting time imposes dead weight losses on patients, lower waiting times should be o¤ered to groups with higher marginal waiting time costs and with less elastic demand for the treatment.