The Effect of Cost Suppression under Universal Health Insurance on the Allocation of Talent and the Development of Expertise: Cosmetic Surgery in Japan
AbstractJapanese national health insurance provides universal coverage. This system necessarily entails a subsidy that dramatically raises the demand for medical services. In the face of the increased demand, the government suppresses costs by suppressing prices. Through biographical and income data on more than 4,000 Tokyo physicians, I explore the effect of this price suppression on the allocation of talent and the development of expertise. Crucially, this national health insurance does not cover services-like elective cosmetic surgery-deemed medically superfluous. Facing price caps in the covered sector but competitive prices in these "superfluous" sectors, the most talented doctors disproportionately shift into the "superfluous" sectors and there invest heavily in their expertise: cosmetic surgeons are more likely than other doctors (more likely even than noncosmetic plastic surgeons) to have attended a more selective medical school, to have served on a medical school faculty, to be board certified, and to earn high incomes. (c) 2009 by The University of Chicago. All rights reserved..
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Bibliographic InfoArticle provided by University of Chicago Press in its journal The Journal of Law and Economics.
Volume (Year): 52 (2009)
Issue (Month): 3 (08)
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Web page: http://www.journals.uchicago.edu/JLE/
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- Kawaguchi, Daiji & Murao, Tetsushi & Kambayashi, Ryo, 2013. "Incidence of Strict Quality Standards: Protection of Consumers or Windfall for Professionals?," IZA Discussion Papers 7443, Institute for the Study of Labor (IZA).
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