Patient Choice, Payment Systems and Multidimensional Quality

Enrico Camarda and Sebastian Fleitas

No 20283, CEPR Discussion Papers from Centre for Economic Policy Research

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.

Keywords: Regulation; Quality of care (search for similar items in EconPapers)
JEL-codes: I11 I18 L15 L44 L51 (search for similar items in EconPapers)
Date: 2025-05
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