Regulated medical fee schedule of the Japanese health care system

Makoto Kakinaka and Ryuta Kato

International Journal of Health Economics and Management, 2013, vol. 13, issue 3, 317 pages

Abstract: This study presents a theoretical framework for examining the effect of the Japanese government-regulated medical price schedule, ‘Shinryo-Houshu-Seido,’ on the behavior of medical providers. In particular, we discuss the optimal rule of this price schedule for the regulator, taking into account information asymmetry between the regulator and providers. Our simple model predicts that heterogeneous providers either under-provide or over-provide medical inputs in comparison with the socially optimal outcome. Moreover, our results show that when the allocated budget is reduced to a certain level, even the second-best outcome becomes unachievable, no matter how the price schedule is regulated. While the limited budget size is shown to have a clear negative effect on social welfare, we suggest that the prospect of obtaining the second-best outcome is left to negotiation between the regulator and the budget allocator. Copyright Springer Science+Business Media New York 2013

Keywords: Asymmetric information; Budget caps; Regulated medical fee schedule; Japanese health care system (search for similar items in EconPapers)
Date: 2013
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Working Paper: Regulated Medical Fee Schedule of the Japanese Health Care System (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:ijhcfe:v:13:y:2013:i:3:p:301-317

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DOI: 10.1007/s10754-013-9133-6

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