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Patient Mobility, Health Care Quality and Welfare

Patient mobility is a key issue in the EU who recently pased a new law on patients`right to EU-wide provider choice. In this paper we use a hotelling model with txo regions that differ in technology to study the impact of patient mobility leads to too low (higt) quality and two few (many) patients being treated in the high-skill (low-skill) region. A centralised solution with patient mobility implements the first best, but the low - skill region would not be willing to trnsfer authority as its welfare is lower than without mobility. In a decentralised solution, the effects of pacient mobility depend on the transfer payment. If the payment is below marginal cost, mobility leads to a "race-to-the-bottom" in quality and lower welfare in both regions. In the payment is equal to marginal cost, quality and welfare remain unchanged in the high-skill region, but the low-skill region benefits. For a socially optimal payment, wich is higher than marginal cost, quality levels in the two regions are closer to (but not at) the first best, but welfare is lower in the low-skill region. Thus, patient mobility can have adverse effects on quality provision and welfare unles an appropriate transfer payment scheme is implemented.

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Paper provided by NIPE - Universidade do Minho in its series NIPE Working Papers with number 26/2011.

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Date of creation: 2011
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Handle: RePEc:nip:nipewp:26/2011
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  1. Gravelle, Hugh & Sivey, Peter, 2010. "Imperfect information in a quality-competitive hospital market," Journal of Health Economics, Elsevier, vol. 29(4), pages 524-535, July.
  2. Oates, Wallace E., 2001. "Fiscal competition and European Union: contrasting perspectives," Regional Science and Urban Economics, Elsevier, vol. 31(2-3), pages 133-145, April.
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  6. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2009. "Hospital Competition and Quality with Regulated Prices," CESifo Working Paper Series 2635, CESifo Group Munich.
  7. Hiroshi Aiura & Yasuo Sanjo, 2010. "Privatization of local public hospitals: effect on budget, medical service quality, and social welfare," International Journal of Health Care Finance and Economics, Springer, vol. 10(3), pages 275-299, September.
  8. Halonen-Akatwijuka, Maija & Propper, Carol, 2008. "Competition and decentralisation in government bureaucracies," Journal of Economic Behavior & Organization, Elsevier, vol. 67(3-4), pages 903-916, September.
  9. Legido-Quigley, Helena & Glinos, Irene A. & Baeten, Rita & McKee, Martin & Busse, Reinhard, 2012. "Analysing arrangements for cross-border mobility of patients in the European Union: A proposal for a framework," Health Policy, Elsevier, vol. 108(1), pages 27-36.
  10. Brekke, Kurt R. & Nuscheler, Robert & Straume, Odd Rune, 2002. "Quality and location choices under price regulation
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  11. Jelovac, I. & Macho-Stadler, I., 1998. "Comparing Organizational Structures in Health Services," UFAE and IAE Working Papers 412.98, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  12. Martin Gaynor, 2006. "What Do We Know About Competition and Quality in Health Care Markets?," NBER Working Papers 12301, National Bureau of Economic Research, Inc.
  13. Hoel, Michael, 2004. "Interregional interactions and population mobility," Journal of Economic Behavior & Organization, Elsevier, vol. 55(3), pages 419-433, November.
  14. Nielsen, Soren Bo, 2001. " A Simple Model of Commodity Taxation and Cross-Border Shopping," Scandinavian Journal of Economics, Wiley Blackwell, vol. 103(4), pages 599-623, December.
  15. Gravelle, Hugh, 1999. "Capitation contracts: access and quality," Journal of Health Economics, Elsevier, vol. 18(3), pages 315-340, June.
  16. Alessandro Petretto, 2000. "On the cost-benefit of the regionalisation of the National Health Service," Economics of Governance, Springer, vol. 1(3), pages 213-232, December.
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