Paying Providers

Peter Zweifel (), Friedrich Breyer and Mathias Kifmann ()
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Peter Zweifel: University of Zurich
Mathias Kifmann: University of Augsburg

Chapter 10 in Health Economics, 2009, pp 331-377 from Springer

Abstract: Abstract One of the guiding themes of this book is the optimal design of incentives for patients and providers. In Chapter 6, we concentrated on the demand side. In case of moral hazard, we found that complete insurance coverage encourages excessive use of health care services by the insured. For this reason, demand-side cost sharing in the form of copayments will usually be optimal. In this chapter, we turn to the supply side to examine optimal incentives for providers of health care services who are prone to moral hazard as well. After all, they are guaranteed reimbursement regardless of cost by an insurer paying fee-for-service. Incentives to control costs under such a payment system are weak, calling for some kind of supply-side cost sharing.

Keywords: Risk Premium; Payment System; Risk Averse; Participation Constraint; Cost Type (search for similar items in EconPapers)
Date: 2009
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DOI: 10.1007/978-3-540-68540-1_10

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