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Health Insurance, Treatment Plan, and Delegation to Altruistic Physician

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  • Ting Liu

    ()
    (Department of Economics, Stony Brook University)

  • Ching-to Albert Ma

    (Department of Economics, Boston University)

Abstract

We study delegating a consumer's treatment plan decisions to an altruistic physician. The physician?s degree of altruism is his private information. The consumer's illness severity will be learned by the physician, and also will become his private information. Treatments are discrete choices, and can be combined to form treatment plans. We distinguish between two commitment regimes. In the first, the physician can commit to treatment decisions at the time a payment contract is accepted. In the second, the physician cannot commit to treatment decisions at that time, and will wait until he learns about the patient's illness to do so. In the commitment game, the first best is implemented by a single payment contract to all types of altruistic physician. In the noncommitment game, the first best is not achieved All but the most altruistic physician earn positive profits, and treatment decisions are distorted from the first best.

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File URL: http://www.stonybrook.edu/economics/research/papers/2012/Sequential_treatment_JEBO.pdf
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Bibliographic Info

Paper provided by Stony Brook University, Department of Economics in its series Department of Economics Working Papers with number 12-08.

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Date of creation: Aug 2012
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Handle: RePEc:nys:sunysb:12-08

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Keywords: Optimal contract; delegation; altruistic physician; commitment.;

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Cited by:
  1. Levaggi, Rosella & Moretto, Michele & Pertile, Paolo, 2014. "Two-part payments for the reimbursement of investments in health technologies," Health Policy, Elsevier, vol. 115(2), pages 230-236.
  2. Makoto Kakinaka & Ryuta Kato, 2013. "Regulated medical fee schedule of the Japanese health care system," International Journal of Health Care Finance and Economics, Springer, vol. 13(3), pages 301-317, December.
  3. Godager, Geir & Wiesen, Daniel, 2013. "Profit or patients’ health benefit? Exploring the heterogeneity in physician altruism," Journal of Health Economics, Elsevier, vol. 32(6), pages 1105-1116.
  4. Rosella Levaggi & Michele Moretto & Paolo Pertile, 2012. "DRGs: the link between investment in technologies and appropriateness," Working Papers 31/2012, University of Verona, Department of Economics.

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