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Physician Financial Incentives and Cesarean Section Delivery

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Author Info
Jonathan Gruber
Maria Owings

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Abstract

The `induced demand' model states that in the face of negative income shocks physicians may exploit their agency relationship with patients by providing excessive care in order to maintain their incomes. We test this model by exploiting an exogenous change in the financial environment facing obstetrician/gynecologists during the 1970s: declining fertility in the U.S. We argue that the 13.5% fall in fertility over the 1970-1982 period increased the income pressure on ob/gyns, and led them to substitute from normal childbirth towards a more highly reimbursed alternative, cesarean delivery. Using a nationally representative micro-data set for this period, we show that there is a strong correlation between within state declines in fertility and within state increases in cesarean utilization. This correlation is robust to consideration of a variety of alternative hypotheses, and appears to be symmetric with respect to periods of fertility decline and fertility increase.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4933.

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Date of creation: Nov 1994
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Handle: RePEc:nbr:nberwo:4933

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I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

References listed on IDEAS
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  1. Grytten, Jostein & Holst, Dorthe & Laake, Peter, 1990. "Supplier inducement : Its effect on dental services in Norway," Journal of Health Economics, Elsevier, vol. 9(4), pages 483-491, December. [Downloadable!] (restricted)
  2. David E. Bloom & James Trussell, 1983. "What Are the Determinants of Delayed Childbearing and Permanent Childlessness in the United States?," NBER Working Papers 1140, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. T Rice & R Labelle, 1989. "Do Physicians Induce Demand for Medical Service?," Centre for Health Economics and Policy Analysis Working Paper Series 18, Centre for Health Economics and Policy Analysis (CHEPA), McMaster University, Hamilton, Canada. [Downloadable!]
  4. Thomas G. McGuire & Mark V. Pauly, 1991. "Physician Response to Fee Changes with Multiple Payers," Papers 0015, Boston University - Industry Studies Programme.
  5. McGuire, Thomas G. & Pauly, Mark V., 1991. "Physician response to fee changes with multiple payers," Journal of Health Economics, Elsevier, vol. 10(4), pages 385-410. [Downloadable!] (restricted)
  6. Victor R. Fuchs, 1978. "The Supply of Surgeons and the Demand for Operations," NBER Working Papers 0236, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Cromwell, Jerry & Mitchell, Janet B., 1986. "Physician-induced demand for surgery," Journal of Health Economics, Elsevier, vol. 5(4), pages 293-313, December. [Downloadable!] (restricted)
  8. Goddeeris, John H, 1984. "Medical Insurance, Technological Change, and Welfare," Economic Inquiry, Oxford University Press, vol. 22(1), pages 56-67, January.
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  1. Bernard Fortin & Nicolas Jacquemet & Bruce Shearer, 2008. "Policy Analysis in the health-services market: accounting for quality and quantity," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00305309_v1, HAL. [Downloadable!]
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  2. Anupa Bir & Karen Eggleston, 2003. "Physician Dual Practice: Access Enhancement or Demand Inducement?," Discussion Papers Series, Department of Economics, Tufts University 0311, Department of Economics, Tufts University. [Downloadable!]
  3. Wayne Dunham, 2003. "Moral Hazard and the Market for Used Automobiles," Review of Industrial Organization, Springer, vol. 23(1), pages 65-83, August. [Downloadable!] (restricted)
  4. Leo Turcotte & John Robst & Solomon Polachek, 2005. "Medicaid Coverage and Medical Interventions During Pregnancy," International Journal of Health Care Finance and Economics, Springer, vol. 5(3), pages 255-271, September. [Downloadable!] (restricted)
  5. Jonathan Skinner & John E. Wennberg, 1998. "How Much is Enough? Efficiency and Medicare Spending in the Last Six Months of Life," NBER Working Papers 6513, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Ron Borzekowski, 2002. "Measuring the cost impact of hospital information systems: 1987-1994," Finance and Economics Discussion Series 2002-42, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  7. Paul Ellickson & Scott Stern & Manuel Trajtenberg, 1999. "Patient Welfare and Patient Compliance: An Empirical Framework for Measuring the Benefits from Pharmaceutical Innovation," NBER Working Papers 6890, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  8. Christopher C. Afendulis & Daniel P. Kessler, 2006. "Tradeoffs from Integrating Diagnosis and Treatment in Markets for Health Care," NBER Working Papers 12623, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Leo Turcotte & John Robst & Solomon Polachek, 2005. "Medical Interventions among Pregnant Women in Fee-for-Service and Managed Care Insurance: A Propensity Score Analysis," IZA Discussion Papers 1803, Institute for the Study of Labor (IZA). [Downloadable!]
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  10. Etienne Dumont & Bernard Fortin & Nicolas Jacquemet & Bruce Shearer, 2007. "Physicians’ Multitasking and Incentives: Empirical Evidence from a Natural Experiment," IZA Discussion Papers 3229, Institute for the Study of Labor (IZA). [Downloadable!]
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  11. Steven D. Levitt & Chad Syverson, 2005. "Market Distortions when Agents are Better Informed: The Value of Information in Real Estate Transactions," NBER Working Papers 11053, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  12. Daniele Fabbri & Chiara Monfardini, 2006. "Style of practice and assortative mating: a recursive probit analysis of cesarean section scheduling in Italy," CHILD Working Papers wp06_06, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY. [Downloadable!]
    Other versions:
  13. Geir Godager & Tor Iversen & Ching-To Ma, 2009. "Service motives and profit incentives among physicians," International Journal of Health Care Finance and Economics, Springer, vol. 9(1), pages 39-57, March. [Downloadable!] (restricted)
    Other versions:
  14. Gabrielle Demange & Pierre-Yves Geoffard, 2006. "Reforming incentive schemes under political constraints: the physician agency," Annales d'Economie et de Statistique, ADRES, issue 83-84, pages 09, Juillet-D. [Downloadable!]
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  15. Janet Currie & Jonathan Gruber, 1997. "The Technology of Birth: Health Insurance, Medical Interventions, and Infant Health," NBER Working Papers 5985, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  16. Arrieta, Alejandro, 2007. "A Structural Misclassifcation Model to Estimate the Impact of Physician Incentives on Healthcare Utilization," MPRA Paper 6718, University Library of Munich, Germany. [Downloadable!]
  17. Jon Gruber & John Kim & Dina Mayzlin, 1998. "Physician Fees and Procedure Intensity: The Case of Cesarean Delivery," NBER Working Papers 6744, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  18. Janet Currie & W. Bentley MacLeod, 2006. "First Do No Harm?: Tort Reform and Birth Outcomes," NBER Working Papers 12478, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  19. Uwe Dulleck & Rudolf Kerschbamer & Matthias Sutter, 2009. "The Economics of Credence Goods: On the Role of Liability, Verifiability, Reputation and Competition," Working Papers 2009-03, Faculty of Economics and Statistics, University of Innsbruck. [Downloadable!]
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