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Provider competition and over-utilization in health care

  • Jan Boone

    ()

  • Rudy Douven

    ()

This paper compares the welfare effects of three ways in which health care can be organized: no competition (NC), competition for the market (CfM) and competition on the market (CoM) where the payer offers the optimal contract to providers in each case. We show that CfM is optimal if the payer either has contractible information on provider quality or can enforce cost efficient protocols. If such contractible information is not available NC or CoM can be optimal depending on whether patients react to decentralized information on quality differences between providers and whether payer’s and patients’ preferences are aligned.

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File URL: http://www.cpb.nl/sites/default/files/publicaties/download/cpb-discussion-paper-275-provider-competition-and-over-utilization-health-care.pdf
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Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Paper with number 275.

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Date of creation: Apr 2014
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Handle: RePEc:cpb:discus:275
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  12. Amitabh Chandra & Douglas O. Staiger, 2007. "Productivity Spillovers in Health Care: Evidence from the Treatment of Heart Attacks," Journal of Political Economy, University of Chicago Press, vol. 115, pages 103-140.
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  16. David Cutler, 2006. "The Economics of Health System Payment," De Economist, Springer, vol. 154(1), pages 1-18, 03.
  17. Giuffrida, Antonio & Gravelle, Hugh, 2001. "Inducing or restraining demand: the market for night visits in primary care," Journal of Health Economics, Elsevier, vol. 20(5), pages 755-779, September.
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