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Provider competition and over-utilization in health care

Author

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  • Jan Boone

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • Rudy Douven

    (CPB Netherlands Bureau for Economic Policy Analysis)

Abstract

This paper compares the welfare effects of three ways in which health care can be organized: no competition (NC), competition for the market (CfM) and competition on the market (CoM) where the payer offers the optimal contract to providers in each case. We show that CfM is optimal if the payer either has contractible information on provider quality or can enforce cost efficient protocols. If such contractible information is not available NC or CoM can be optimal depending on whether patients react to decentralized information on quality differences between providers and whether payer’s and patients’ preferences are aligned.

Suggested Citation

  • Jan Boone & Rudy Douven, 2014. "Provider competition and over-utilization in health care," CPB Discussion Paper 275, CPB Netherlands Bureau for Economic Policy Analysis.
    • Handle: RePEc:cpb:discus:275
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    References listed on IDEAS

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    Cited by:

    1. Boone, Jan, 2019. "Health provider networks with private contracts: Is there under-treatment in narrow networks?," Journal of Health Economics, Elsevier, vol. 67(C).
    2. Albrecht, Martin, 2018. "Potenziale für mehr Wettbewerb im Gesundheitswesen: Expertise," Working Papers 05/2018, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.

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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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