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Insurance coverage and agency problems in doctor prescriptions: Evidence from a field experiment in China

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  • Lu, Fangwen

Abstract

This study examines doctors' prescribing decisions using controlled hospital visits with randomized patient insurance and doctor incentive status. The results suggest that, when they expect to obtain a proportion of patients' drug expenditures, doctors write 43% more expensive prescriptions to insured patients than to uninsured patients. These differences are largely explained by an agency hypothesis that doctors act out of self-interest by prescribing unnecessary or excessively expensive drugs to insured patients, rather than by a considerate doctor hypothesis that doctors take account of the tradeoff between drug efficacy and patients' ability to pay.

Suggested Citation

  • Lu, Fangwen, 2014. "Insurance coverage and agency problems in doctor prescriptions: Evidence from a field experiment in China," Journal of Development Economics, Elsevier, vol. 106(C), pages 156-167.
  • Handle: RePEc:eee:deveco:v:106:y:2014:i:c:p:156-167
    DOI: 10.1016/j.jdeveco.2013.09.001
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    References listed on IDEAS

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    1. repec:eee:pubeco:v:154:y:2017:i:c:p:122-136 is not listed on IDEAS
    2. Bernal, Noelia & Carpio, Miguel A. & Klein, Tobias J., 2017. "The effects of access to health insurance: Evidence from a regression discontinuity design in Peru," Journal of Public Economics, Elsevier, vol. 154(C), pages 122-136.
    3. Currie, Janet & Lin, Wanchuan & Meng, Juanjuan, 2014. "Addressing antibiotic abuse in China: An experimental audit study," Journal of Development Economics, Elsevier, vol. 110(C), pages 39-51.
    4. Tianyan Hu & Sandra L. Decker & Shin-Yi Chou, 2014. "The Impact of Health Insurance Expansion on Physician Treatment Choice: Medicare Part D and Physician Prescribing," NBER Working Papers 20708, National Bureau of Economic Research, Inc.
    5. Janet Currie & Wanchuan Lin & Juanjuan Meng, 2012. "Using Audit Studies to Test for Physician Induced Demand: The Case of Antibiotic Abuse in China," NBER Working Papers 18153, National Bureau of Economic Research, Inc.
    6. Feng Huang & Li Gan, 2015. "Impact of China's Urban Employee Basic Medical Insurance on Health Care Expenditure and Health Outcomes," NBER Working Papers 20873, National Bureau of Economic Research, Inc.
    7. Fiebig, D.G. & Viney, R. & Haas, M. & Knox, S. & Street, D. & Weisberg, E. & Bateson, D., 2015. "Complexity and doctor choices when discussing contraceptives," Health, Econometrics and Data Group (HEDG) Working Papers 15/14, HEDG, c/o Department of Economics, University of York.
    8. Bernal, Noelia & Carpio, Miguel A. & Klein, Tobias J., 2017. "The effects of access to health insurance: Evidence from a regression discontinuity design in Peru," Journal of Public Economics, Elsevier, vol. 154(C), pages 122-136.
    9. Sun, Xiaojie & Liu, Xiaoyun & Sun, Qiang & Yip, Winnie & Wagstaff, Adam & Meng, Qingyue, 2014. "The impact of a pay-for-performance scheme on prescription quality in rural China : an impact evaluation," Policy Research Working Paper Series 6892, The World Bank.

    More about this item

    Keywords

    Health insurance; Agency problems; Incentive; Drug prescription; Field experiment;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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