Advanced Search
MyIDEAS: Login

Regulated Medical Fee Schedule of the Japanese Health Care System

Contents:

Author Info

Abstract

We present a theoretical framework for investigating the effect of the Japanese government-regulated medical fee schedule, 'Shinryo-Houshu-Seido,' on the behavior of medical providers. We also discuss the optimal rule of this fee schedule for the regulator, taking into account information asymmetry between the regulator and providers. Our simple model predicts that under the current fee schedule heterogeneous providers either under-provide or over-provide medical inputs, depending on the price. Furthermore, our analytical results show that when the allocated budget is reduced to a certain level, even the second-best outcome becomes unachievable, no matter how the fee schedule is regulated. While we demonstrate that the global budget caps or the limited budget size is shown to have a clear negative effect on social welfare, we suggest that the prospect of obtaining the second-best outcome without complete information on heterogeneous providers is left to negotiation between the regulator and the budget allocator.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2011_13.pdf
File Function: First version, 2011
Download Restriction: no

Bibliographic Info

Paper provided by Research Institute, International University of Japan in its series Working Papers with number EMS_2011_13.

as in new window
Length: 27 pages
Date of creation: May 2011
Date of revision:
Handle: RePEc:iuj:wpaper:ems_2011_13

Contact details of provider:
Postal: 777 Kokusai-cho, Minami Uonuma0-shi, Niigata 949-7277 JAPAN
Phone: 81+(0)25-779-1112
Fax: 81+(0)25-779-1187
Web page: http://www.iuj.ac.jp/research/
More information through EDIRC

Related research

Keywords: asymmetric information; budget caps; regulated medical fee schedule; Japanese health care system;

Other versions of this item:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Judith K. Hellerstein, 1998. "The Importance of the Physician in the Generic Versus Trade-Name Prescription Decision," RAND Journal of Economics, The RAND Corporation, vol. 29(1), pages 108-136, Spring.
  2. Custer, William S. & Moser, James W. & Musacchio, Robert A. & Willke, Richard J., 1990. "The production of health care services and changing hospital reimbursement : The role of hospital-medical staff relationships," Journal of Health Economics, Elsevier, vol. 9(2), pages 167-192, September.
  3. Newhouse, Joseph P., 1983. "Two prospective difficulties with prospective payment of hospitals, or, it's better to be a resident than a patient with a complex problem," Journal of Health Economics, Elsevier, vol. 2(3), pages 269-274, December.
  4. Randall P. Ellis & Thomas G. McGuire, 1993. "Supply-Side and Demand-Side Cost Sharing in Health Care," Journal of Economic Perspectives, American Economic Association, vol. 7(4), pages 135-151, Fall.
  5. Glazer, Jacob & McGuire, Thomas G, 1994. "Payer Competition and Cost Shifting in Health Care," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 71-92, Spring.
  6. Liu, Ya-Ming & Yang, Yea-Huei Kao & Hsieh, Chee-Ruey, 2009. "Financial incentives and physicians' prescription decisions on the choice between brand-name and generic drugs: Evidence from Taiwan," Journal of Health Economics, Elsevier, vol. 28(2), pages 341-349, March.
  7. CRAINICH, David & LELEU, Hervé & MAULEON, Ana, 2006. "The optimality of hospital financing system: the role of physician-manager interactions," CORE Discussion Papers 2006005, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. Dor, Avi & Watson, Harry, 1995. "The hospital-physician interaction in U.S. hospitals: Evolving payment schemes and their incentives," European Economic Review, Elsevier, vol. 39(3-4), pages 795-802, April.
  9. Coscelli, Andrea, 2000. "The Importance of Doctors' and Patients' Preferences in the Prescription Decision," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 349-69, September.
  10. Mougeot, Michel & Naegelen, Florence, 2005. "Hospital price regulation and expenditure cap policy," Journal of Health Economics, Elsevier, vol. 24(1), pages 55-72, January.
  11. Liu, Ting & Ma, Ching-to Albert, 2013. "Health insurance, treatment plan, and delegation to altruistic physician," Journal of Economic Behavior & Organization, Elsevier, vol. 85(C), pages 79-96.
  12. Ellis, Randall P. & McGuire, Thomas G., 1990. "Optimal payment systems for health services," Journal of Health Economics, Elsevier, vol. 9(4), pages 375-396, December.
  13. Ching-to Albert Ma & Thomas G. McGuire, 1995. "Optimal Health Insurance and Provider Payment," Papers 0059, Boston University - Industry Studies Programme.
  14. Adam Wagstaff, 2007. "Health systems in East Asia: what can developing countries learn from Japan and the Asian Tigers?," Health Economics, John Wiley & Sons, Ltd., vol. 16(5), pages 441-456.
  15. Boadway, Robin & Marchand, Maurice & Sato, Motohiro, 2004. "An optimal contract approach to hospital financing," Journal of Health Economics, Elsevier, vol. 23(1), pages 85-110, January.
  16. Allen, Robin & Gertler, Paul J, 1991. "Regulation and the Provision of Quality to Heterogenous Consumers: The Case of Prospective Pricing of Medical Services," Journal of Regulatory Economics, Springer, vol. 3(4), pages 361-75, December.
  17. David E. M. Sappington & Tracy R. Lewis, 1999. "Using Subjective Risk Adjusting to Prevent Patient Dumping in the Health Care Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(3), pages 351-382, 09.
  18. Ellis, Randall P., 1998. "Creaming, skimping and dumping: provider competition on the intensive and extensive margins1," Journal of Health Economics, Elsevier, vol. 17(5), pages 537-555, October.
  19. Wright, Donald J., 2007. "Specialist payment schemes and patient selection in private and public hospitals," Journal of Health Economics, Elsevier, vol. 26(5), pages 1014-1026, September.
  20. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
  21. Chalkley, M. & Malcomson, J.M., 1995. "Contracting for health services when patient demand does not reflect quality," Discussion Paper Series In Economics And Econometrics 9514, Economics Division, School of Social Sciences, University of Southampton.
  22. Selden, Thomas M., 1990. "A model of capitation," Journal of Health Economics, Elsevier, vol. 9(4), pages 397-409, December.
  23. Lundin, Douglas, 2000. "Moral hazard in physician prescription behavior," Journal of Health Economics, Elsevier, vol. 19(5), pages 639-662, September.
  24. Toshiaki Iizuka, 2007. "Experts' agency problems: evidence from the prescription drug market in Japan," RAND Journal of Economics, RAND Corporation, vol. 38(3), pages 844-862, 09.
  25. Toshiaki Iizuka, 2009. "Generic Entry In A Regulated Pharmaceutical Market," The Japanese Economic Review, Japanese Economic Association, vol. 60(1), pages 63-81.
  26. Ma, Ching-to Albert, 1994. "Health Care Payment Systems: Cost and Quality Incentives," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 93-112, Spring.
  27. Pauly, Mark V & Redisch, Michael, 1973. "The Not-For-Profit Hospital as a Physicians' Cooperative," American Economic Review, American Economic Association, vol. 63(1), pages 87-99, March.
  28. Rogerson, William P, 1994. "Choice of Treatment Intensities by a Nonprofit Hospital under Prospective Pricing," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 7-51, Spring.
  29. Pope, Gregory C., 1989. "Hospital nonprice competition and medicare reimbursement policy," Journal of Health Economics, Elsevier, vol. 8(2), pages 147-172, June.
  30. Bos, Dieter & De Fraja, Gianni, 2002. "Quality and outside capacity in the provision of health services," Journal of Public Economics, Elsevier, vol. 84(2), pages 199-218, May.
  31. David Dranove, 1987. "Rate-Setting by Diagnosis Related Groups and Hospital Specialization," RAND Journal of Economics, The RAND Corporation, vol. 18(3), pages 417-427, Autumn.
  32. Joseph P. Newhouse, 1996. "Reimbursing Health Plans and Health Providers: Efficiency in Production versus Selection," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1236-1263, September.
  33. Ellis, Randall P. & McGuire, Thomas G., 1988. "Insurance principles and the design of prospective payment systems," Journal of Health Economics, Elsevier, vol. 7(3), pages 215-237, September.
  34. James M. Poterba, 1994. "A Skeptic's View of Global Budget Caps," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 67-73, Summer.
  35. Siciliani, Luigi, 2006. "Selection of treatment under prospective payment systems in the hospital sector," Journal of Health Economics, Elsevier, vol. 25(3), pages 479-499, May.
  36. Beitia, Arantza, 2003. "Hospital quality choice and market structure in a regulated duopoly," Journal of Health Economics, Elsevier, vol. 22(6), pages 1011-1036, November.
  37. Dranove, David & Satterthwaite, Mark A., 2000. "The industrial organization of health care markets," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 20, pages 1093-1139 Elsevier.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:iuj:wpaper:ems_2011_13. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kazumi Imai, Office of Academic Affairs).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.