Economics at your fingertips  

Asymmetric Information and Outcome-based Compensation in Health Care – Theoretical Implications

Udo Schneider ()

HEW from University Library of Munich, Germany

Abstract: The discussion about health care systems focuses on the dynamics of expenditures and on the weak growth of revenues. In this discussion it is widely overseen that medical expenditures and the supply of medical services depend crucially on the compensation of physician services. The paper analyzes the implementation of an outcome-based payment system in the presence of asymmetric information. Two cases are studied in detail. First, the common situation of physician’s moral hazard is analyzed. Second, a double moral hazard model is developed. Here, the patient’s actions influence health outcome and cannot be monitored by the physician. It is shown that the choice of insurance and payment contracts depends on the characteristics of asymmetric information. In addition, lack of knowledge about health status and productivity of health inputs prevent a solution using outcome-based contracts.

Keywords: outcome-based contract; double moral hazard; health policy (search for similar items in EconPapers)
JEL-codes: D82 I11 I12 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2005-01-17
New Economics Papers: this item is included in nep-hea
Note: Type of Document - pdf; pages: 29
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in HEW from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ().

Page updated 2024-01-12
Handle: RePEc:wpa:wuwphe:0501006