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Insurance coverage and agency problems in doctor prescriptions: Evidence from a field experiment in China

Fangwen Lu

Journal of Development Economics, 2014, vol. 106, issue C, 156-167

Abstract: This study examines doctors' prescribing decisions using controlled hospital visits with randomized patient insurance and doctor incentive status. The results suggest that, when they expect to obtain a proportion of patients' drug expenditures, doctors write 43% more expensive prescriptions to insured patients than to uninsured patients. These differences are largely explained by an agency hypothesis that doctors act out of self-interest by prescribing unnecessary or excessively expensive drugs to insured patients, rather than by a considerate doctor hypothesis that doctors take account of the tradeoff between drug efficacy and patients' ability to pay.

Keywords: Health insurance; Agency problems; Incentive; Drug prescription; Field experiment (search for similar items in EconPapers)
JEL-codes: D82 I11 I18 L15 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1016/j.jdeveco.2013.09.001

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Handle: RePEc:eee:deveco:v:106:y:2014:i:c:p:156-167