Information diffusion and best practice adoption
In: Handbook of Health Economics
Incomplete information issues pervade health care markets, with market participants often having relatively little information, and their behavior exhibiting corresponding aberrations from classic market behavior.Consumers often have relatively little information about prices and quality offered in health care markets, leading to substantial dispersion in prices of apparently identical services. Equilibrium price dispersion increases as the demand elasticity for the product falls. Since health insurance lowers the elasticity of demand, price dispersions should occur more often (and with greater magnitude) in markets such as physician services with relatively complete insurance. Further, many insurance plans blunt incentives for search, compounding the problem.On the supply side, evidence shows that physicians behave as if they did not share the same information about the productivity of medical care. At the level of geographic regions, numerous studies show the rates at which various medical interventions are used on standardized populations differ hugely -- often by an order of magnitude or more from high to low -- and these differences in treatment rates do not converge through time as would occur in standard market learning models.Similarly, individual physicians within a given region also display differences in the propensity to use medical resources. Information from a major study of doctors' "styles" shows large and statistically significant differences in doctors' use of medical resources to treat their patients, even with strong measures of illness severity of the patients included in the models.Although requiring strong assumptions, one can estimate the welfare losses arising from incomplete information on the provider side of the market. Estimates of the upper bound of these welfare losses place the magnitude of loss in the same range on a per capita basis as the traditionally emphasized welfare losses associated with perverse incentives in health insurance.The importance of incomplete information leads to discussions of the economic and legal incentives for the production and dissemination of information. Legal incentives to produce such information for medical strategies (treatment protocols) are weak, particularly compared with the incentives in markets for specific products such as prescription drugs. The public good nature of such information and the government role in supporting its production and dissemination form the concluding parts of this chapter.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
|This chapter was published in: ||This item is provided by Elsevier in its series Handbook of Health Economics with number
1-05.||Handle:|| RePEc:eee:heachp:1-05||Contact details of provider:|| Web page: http://www.elsevier.com/wps/find/bookseriesdescription.cws_home/BS_HE/description|
When requesting a correction, please mention this item's handle: RePEc:eee:heachp:1-05. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.