Public coverage of dental care: universal or targeted?

Abstract In this paper, we analyze the impact of public dental care coverage – universal versus targeted – on access, pricing, and public spending in a model with two competing dental practices and heterogeneous patient income groups. We evaluate two types of reimbursement schemes: fixed subsidies and cost sharing. Our findings show that public coverage improves access for low‐income patients but increases producer prices due to reduced price elasticity of demand. Targeted coverage provides greater access at lower public cost compared with universal coverage, especially under cost‐sharing schemes. With fixed subsidies, both schemes achieve similar access, but targeted coverage remains more cost‐efficient. The policy that maximizes utilitarian welfare is targeted coverage with a fixed subsidy, balancing improved access for low‐income patients against higher prices for high‐income patients. This trade‐off highlights challenges in implementing targeted policies but provides insights for designing efficient and equitable public dental care systems.