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Cost Sharing in Health Service Provision: An Empirical Assessment of Cost Savings

James Malcomson () and Martin Chalkley ()

No 69, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: Fixed price payments for treatment of patients with a specified diagnosis are widespread in both US Medicare and the British NHS even though there are substantial variations in the cost of treatment. Theory suggests that, when there is asymmetric information about those costs, total payment can be reduced by cost sharing. This paper uses data from Medicare to assess the cost savings that might be feasible in practice from cost sharing. For diagnosis related groups with low cost variation, the calculated cost savings are approximately 7%. For those with high cost variation, the calculated cost savings are more than 60%.

Keywords: health services; Medicare; cost sharing; fixed prices (search for similar items in EconPapers)
JEL-codes: I11 (search for similar items in EconPapers)
Date: 2001-04-01
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Journal Article: Cost sharing in health service provision: an empirical assessment of cost savings (2002) Downloads
Working Paper: Cost Sharing in Health Service Provision: An Empirical Assessment of Cost Savings (2001)
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