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The Interaction between Forms of Insurance Contract and Types of Technical Change in Medical Care

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  • James R. Baumgardner

Abstract

A simple three-parameter description of medical technology is introduced to investigate the relationships between technical change, welfare, and type of insurance contract. The value of a particular change in technology depends on the existing form of contract. The marginal equilibrium expected utility to consumers of different types of technical change hinges on the manner in which the insurance arrangement is designed to mitigate moral hazard. These results open the way for a positive model of the effects of insurance arrangements on the types of technology that are adopted and of the effects of technical changes on the prevalent forms of insurance contract.

Suggested Citation

  • James R. Baumgardner, 1991. "The Interaction between Forms of Insurance Contract and Types of Technical Change in Medical Care," RAND Journal of Economics, The RAND Corporation, vol. 22(1), pages 36-53, Spring.
  • Handle: RePEc:rje:randje:v:22:y:1991:i:spring:p:36-53
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    Cited by:

    1. Francisco J. Gomes & Laurence J. Kotlikoff & Luis M. Viceira, 2012. "The Excess Burden of Government Indecision," NBER Chapters,in: Tax Policy and the Economy, Volume 26, pages 125-163 National Bureau of Economic Research, Inc.
    2. Prashant C. Fuloria & Stefanos A. Zenios, 2001. "Outcomes-Adjusted Reimbursement in a Health-Care Delivery System," Management Science, INFORMS, vol. 47(6), pages 735-751, June.
    3. Robert F. Graboyes, 2000. "Getting better, feeling worse : cure rates, health insurance, and welfare," Working Paper 00-05, Federal Reserve Bank of Richmond.
    4. Rachel Kreier & Bhaswati Sengupta, 2015. "Income, Health, and the Value of Preserving Options," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(4), pages 431-448, December.
    5. Kevin Frick, 1999. "Cross product subsidization in the health insurance market with managed care: A model and issues," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 27(2), pages 121-134, June.
    6. Philippe Choné & Ching-To Albert Ma, 2011. "Optimal Health Care Contract under Physician Agency," Annals of Economics and Statistics, GENES, issue 101-102, pages 229-256.
    7. Mas, Núria & Seinfeld, Janice, 2008. "Is managed care restraining the adoption of technology by hospitals?," Journal of Health Economics, Elsevier, vol. 27(4), pages 1026-1045, July.
    8. Bokhari, Farasat A.S., 2009. "Managed care competition and the adoption of hospital technology: The case of cardiac catheterization," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 223-237, March.
    9. Thomas G. McGuire & Jacob Glazer, 2000. "Optimal Risk Adjustment in Markets with Adverse Selection: An Application to Managed Care," American Economic Review, American Economic Association, vol. 90(4), pages 1055-1071, September.
    10. Finocchiaro Castro, Massimo & Guccio, Calogero & Pignataro, Giacomo & Rizzo, Ilde, 2014. "The effects of reimbursement mechanisms on medical technology diffusion in the hospital sector in the Italian NHS," Health Policy, Elsevier, vol. 115(2), pages 215-229.
    11. Sherry Glied, 2003. "Health Care Costs: On the Rise Again," Journal of Economic Perspectives, American Economic Association, vol. 17(2), pages 125-148, Spring.
    12. Cutler, David M. & Zeckhauser, Richard J., 2000. "The anatomy of health insurance," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 11, pages 563-643 Elsevier.
    13. Philippe Choné & Ching-to Albert Ma, 2004. "Asymmetric Information from Physician Agency : Optimal Payment and Healthcare Quantity," Working Papers 2004-37, Center for Research in Economics and Statistics.
    14. Kristopher J. Hult & Tomas J. Philipson, 2012. "Public Liabilities and Health Care Policy," NBER Working Papers 18571, National Bureau of Economic Research, Inc.
    15. Shin-Yi Chou & Jin-Tan Liu & James K. Hammitt, 2004. "National Health Insurance and Technology Adoption: Evidence from Taiwan," Contemporary Economic Policy, Western Economic Association International, vol. 22(1), pages 26-38, January.
    16. Richard Dusansky & Çağatay Koç, 2010. "Implications of the Interaction Between Insurance Choice and Medical Care Demand," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 77(1), pages 129-144.
    17. Farasat A.S. Bokhari, 2001. "Managed Care and the Adoption of Hospital Technology: The Case of Cardiac Catheterization," HEW 0110001, University Library of Munich, Germany.
    18. Stefan Felder, 2004. "Moral Hazard, Arztvergütung und technischer Fortschritt in der Medizin: Korreferat zum Beitrag von Astrid Selder: "Der Einfluss der Arzthonorierung auf die Anwendung neuer Techniken"," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 73(4), pages 589-591.
    19. Robert F. Graboyes, 2000. "Medicine worse than the malady : cure rates, population shifts, and health insurance," Working Paper 00-06, Federal Reserve Bank of Richmond.

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