Information Asymmetry, Insurance, and the Decision to Hospitalize

Ake Blomqvist and Pierre Leger

No 01-03, Cahiers de recherche from HEC Montréal, Institut d'économie appliquée

Abstract: In a theoretical model, we analyze the effects of various kinds of demand- and supply-side incentives in the context of a model in which patients and doctors must decide not only on an aggregate quantity of health services to use in treating various kinds of illness, but also have a choice between different kinds of providers (in particular, outpatient services rendered by primary-care physicians or inpatient services provided by hospital-based specialists). We present two broad models, the traditional fee-for-service payment scheme (with an without information asymmetry) and a managed care setup where physicians are paid via capitation. We find that a second-best optimal managed care plan may dominate (under certain conditions) a second-best optimal conventional plan with cost control through demand-side cost sharing.

Keywords: General Care; Specialty Care; Hospitalization; Insurance; HMOs; Imperfect Information. (search for similar items in EconPapers)
JEL-codes: I1 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2001-05
New Economics Papers: this item is included in nep-cdm and nep-hea
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Information asymmetry, insurance, and the decision to hospitalize (2005)
Working Paper: Information Asymmetry, Insurance, and the Decision to Hospitalize (2002)
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