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Patient Choice, Payment Systems and Multidimensional Quality

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  • Camarda, Enrico
  • Fleitas, Sebastian

Abstract

Price regulation and managed competition are widely used to promote quality in health care markets, where quality is often multidimensional and weakly correlated across dimensions. This paper studies how this multidimensionality affects price regulation, patient allocation, and provider behavior in the England's market for public General Practitioner (GP) services. Using counterfactual simulations, we evaluate reforms reducing quality-related payments. We find that such reductions can improve total welfare, in part because practices re-optimize in line with patient preferences. In absence of externalities, the consumer surplus is maximized at 40% of quality-related payments. Finally, incorporating patient preferences into payment design further enhances welfare.

Suggested Citation

  • Camarda, Enrico & Fleitas, Sebastian, 2025. "Patient Choice, Payment Systems and Multidimensional Quality," CEPR Discussion Papers 20283, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:20283
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    File URL: https://cepr.org/publications/DP20283
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    Keywords

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    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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