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Information Asymmetry, Insurance, and the Decision to Hospitalize

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Author Info
Åke Blomqvist
Pierre Thomas Léger ()

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Abstract

In a theoretical model, we analyze the effects of various kinds of demand- and supply-side incentives in the context of a model in which patients and doctors must decide not only on an aggregate quantity of health services to use in treating various kinds of illness, but also have a choice between different kinds of providers (in particular, outpatient services rendered by primary-care physicians or inpatient services provided by hospital-based specialists). We present two broad models, the traditional fee-for-service payment scheme and a managed care setup where physicians are paid via capitation, and analyze them both with and without information asymmetry. We find that under certain plausible conditions, second-best optimal managed care plans may dominate second-best optimal conventional plans that rely on cost control through demand-side cost sharing.

À l'aide d'un modèle théorique dans lequel patients et médecins doivent choisir la quantité de service à utiliser ainsi que celui, de l'omnipraticien ou du spécialiste uvrant à l'hôpital, qui fournira ces services, nous analysons différents mécanismes d'incitation agissant sur l'offre et la demande. Nous étudions essentiellement deux modes d'organisation : le système conventionnel de rémunération à l'acte et le système de gestion intégrée des soins avec une rémunération per capita; à la fois en présence et en l'absence d'asymétrie d'information. Nous obtenons comme résultat qu'à certaines conditions plausibles, l'optimum de second-rang auquel mène le système de gestion intégrée est supérieur à celui que donne le système conventionnel de rémunération à l'acte qui répercute une partie des coûts sur l'utilisateur.

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Paper provided by CIRANO in its series CIRANO Working Papers with number 2002s-06.

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Date of creation: 01 Jan 2002
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Handle: RePEc:cir:cirwor:2002s-06

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Related research
Keywords: Primary Care Specialty Care Hospitalization Insurance HMOs Capitation Asymmetric Information Omnipraticiens Spécialistes Hospitalisation Assurance Paiements à l'acte et per capita Asymétrie d'information

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I1 - Health, Education, and Welfare - - Health

References listed on IDEAS
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  1. Rochaix, Lise, 1989. "Information asymmetry and search in the market for physicians' services," Journal of Health Economics, Elsevier, vol. 8(1), pages 53-84, March. [Downloadable!] (restricted)
  2. James R. Baumgardner, 1991. "The Interaction between Forms of Insurance Contract and Types of Technical Change in Medical Care," RAND Journal of Economics, The RAND Corporation, vol. 22(1), pages 36-53, Spring. [Downloadable!] (restricted)
  3. Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-77, June. [Downloadable!] (restricted)
  4. Asher Wolinsky, 1993. "Competition in a Market for Informed Experts' Services," RAND Journal of Economics, The RAND Corporation, vol. 24(3), pages 380-398, Autumn. [Downloadable!] (restricted)
  5. Pierre Thomas Léger, 2000. "Quality control mechanisms under capitation payment for medical services," Canadian Journal of Economics, Canadian Economics Association, vol. 33(2), pages 564-586, May. [Downloadable!] (restricted)
  6. Mark V. Pauly, 1979. "The Ethics and Economics of Kickbacks and Fee Splitting," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 344-352, Spring. [Downloadable!] (restricted)
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