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Patient Mobility, Health Care Quality and Welfare

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  • Brekke, Kurt R.

    ()
    (Dept. of Economics, Norwegian School of Economics and Business Administration)

  • Levaggi, Rosella

    ()
    (University of Brescia)

  • Siciliani, Luigi

    ()
    (University of York)

  • Straume, Odd Rune

    ()
    (University of Minho)

Abstract

Patient mobility is a key issue in the EU who recently passed a new law on patients’right to EU-wide provider choice. In this paper we use a Hotelling model with two regions that differ in technology to study the impact of patient mobility on health care quality, health care financing and welfare. A decentralised solution without patient mobility leads to too low (high) quality and too few (many) patients being treated in the high-skill (low-skill) region. A centralised solution with patient mobility implements the first best, but the low-skill region would not be willing to transfer authority as its welfare is lower than without mobility. In a decentralised solution, the effects of patient mobility depend on the transfer payment. If the payment is below marginal cost, mobility leads to a ‘race-to-the-bottom’in quality and lower welfare in both regions. If the payment is equal to marginal cost, quality and welfare remain unchanged in the high-skill region, but the low-skill region bene…ts. For a socially optimal payment, which is higher than marginal cost, quality levels in the two regions are closer to (but not at) the …rst best, but welfare is lower in the low-skill region. Thus, patient mobility can have adverse effects on quality provision and welfare unless an appropriate transfer payment scheme is implemented.

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Bibliographic Info

Paper provided by Department of Economics, Norwegian School of Economics in its series Discussion Paper Series in Economics with number 13/2011.

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Length: 32 pages
Date of creation: 22 Sep 2011
Date of revision:
Handle: RePEc:hhs:nhheco:2011_013

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Keywords: Patient mobility; Health care quality; Regional and global welfare.;

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  1. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2011. "Hospital Competition and Quality with Regulated Prices," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113, pages 444-469, 06.
  2. Søren Bo Nielsen, . "A Simple Model of Commodity Taxation and Cross-Border Shopping," EPRU Working Paper Series 98-18, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
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  10. Brekke, Kurt R. & Nuscheler, Robert & Straume, Odd Rune, 2002. "Quality and location choices under price regulation," Working Papers in Economics 24/02, University of Bergen, Department of Economics.
  11. Thomas P. Lyon, 1999. "Quality Competition, Insurance, and Consumer Choice in Health Care Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(4), pages 546-580, December.
  12. Gravelle, Hugh & Sivey, Peter, 2010. "Imperfect information in a quality-competitive hospital market," Journal of Health Economics, Elsevier, vol. 29(4), pages 524-535, July.
  13. Legido-Quigley, Helena & Glinos, Irene A. & Baeten, Rita & McKee, Martin & Busse, Reinhard, 2012. "Analysing arrangements for cross-border mobility of patients in the European Union: A proposal for a framework," Health Policy, Elsevier, vol. 108(1), pages 27-36.
  14. Hoel, Michael, 2004. "Interregional interactions and population mobility," Journal of Economic Behavior & Organization, Elsevier, vol. 55(3), pages 419-433, November.
  15. Alessandro Petretto, 2000. "On the cost-benefit of the regionalisation of the National Health Service," Economics of Governance, Springer, vol. 1(3), pages 213-232, December.
  16. Gravelle, Hugh, 1999. "Capitation contracts: access and quality," Journal of Health Economics, Elsevier, vol. 18(3), pages 315-340, June.
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