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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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    More about this item

    Keywords

    Health insurance; Agency problems; Incentive; Drug prescription; Field experiment;
    All these keywords.

    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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