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lecture11_2_14_11_large - LECTURE 11: Supply-Side...

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LECTURE 11: Supply-Side Incentives in Health Care
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•Today we want to discuss incentives to supply health services and technologies closer to the ground than the level of politicians •First, we’ll discuss physician incentives, focusing on India (Jishnu Das and Jeffrey Hammer, “Money for Nothing: The Dire Straits of Medical Practice in Delhi, India”) •(Are you too young to appreciate the pun in the paper’s title?) •As context for motivation, recall our discussion of using supply-side incentives (capitation vs. fee-for-service payment, for example) to counteract ex-post mortal hazard under health insurance •At the intermediate level, we’ll discuss the role incentives facing NGOs with development agency contracts to provide health services (Michael Kremer et. al., “Contracting for Health: Evidence from Cambodia”) •And paying for health in rural China…
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•Backdrop: Some basics about physician payment in the U.S. •On the demand side: with health insurance, the price that consumers/patients pay for health services is less than the full “cost” •Ex-post moral hazard – if the full price reflects resource costs (which it presumably doesn’t) and there are no externalities, the result is over-consumption of health services •On the supply-side: traditional ‘fee-for-service’ payments to physicians provides financial incentives to ‘over-supply’ health services •With both patients and physicians having incentives to consume/provide too many health services •How to realign incentives to cut back on over-consumption?
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•How to realign incentives to cut back on ‘over-consumption?’ •One solution is to increase point-of-service prices for patients •But this undermines the fundamental objective of health insurance •Especially inappropriate when there are large positive externalities •An alternative solution: pay clinicians in a way that discourages over-consumption – per person per period payments (“capitation”) or salaries •Always beware of perverse incentives and unintended consequences – for example, capitation can simply give clinicians incentives to care for relatively healthy people •The Cambodia “Contracting for Health” paper considers an example of more actively rewarding the financially- desirable objective directly •And paying for health in China example
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The problem in many developing countries is less often incentives for ‘over-providing,’ but instead weak physician incentives to provide at all – absenteeism between 9am and 3:30pm (from Nazmul Chaudhury and Jeffrey Hammer, “Ghost Doctors: Absenteeism in Rural Bangladeshi Health Facilities”)
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Absenteeism more broadly…
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•Higher rates of absenteeism where conditions are poorer
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This note was uploaded on 03/19/2011 for the course ECON 127 taught by Professor Staff during the Winter '11 term at Stanford.

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lecture11_2_14_11_large - LECTURE 11: Supply-Side...

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