دانلود مقاله ISI انگلیسی شماره 24127
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کد مقاله سال انتشار مقاله انگلیسی ترجمه فارسی تعداد کلمات
24127 2008 15 صفحه PDF سفارش دهید محاسبه نشده
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عنوان انگلیسی
“Selling the store” to the HMO: A life insurance contract for optimal provision of care
منبع

Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)

Journal : Journal of Economic Behavior & Organization, Volume 65, Issue 1, January 2008, Pages 118–132

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چکیده انگلیسی

Health care is a credence good: consumers must consult an expert who diagnoses and repairs a problem. Since effort is difficult to monitor, fraud or low effort are possible. This paper proposes “selling the store” to an HMO via a life insurance contract. The HMO becomes a residual claimant, avoiding payment as long as the patient is alive. This contract forces the HMO to provide a specified level of care, even when a patient does not know his initial level of health. This contract solves several problems associated with fraudulent diagnosis and low effort, but is not a panacea.

مقدمه انگلیسی

Consumers, the United States Congress, HMOs, and doctors are all searching for ways to reform health care, attempting to improve quality and accessibility while restraining cost. At present, there are two main alternatives for a consumer in the U.S. health care market. The first alternative is either to pay for health care costs out of pocket or enter into an insurance pool to pay these costs on a fee-for-service (FFS) basis. This alternative is not ideal because unnecessary procedures and medications may be recommended by a profit-maximizing health care expert. In such cases, the additional costs might outweigh the additional benefits of treatment (i.e., marginal cost is greater than the marginal benefit (MC > MB)). Almost by definition, most insurance options create price distortions that reduce the private marginal cost of the consumer below the true social marginal cost. The second common alternative is to join an HMO, where expenses are limited by its very design. In this case, a consumer is not likely to receive the desired level of care and fail to receive some services for which his MB > MC. Health care is just one example of a type of service where consumers must rely on an expert to diagnose a problem, determine the type of treatment needed, and perform a treatment or repair. These types of services can be classified as credence goods. An increasing percentage of doctors and patients are becoming part of “managed care” organizations, where it is often alleged that choices regarding when and how to treat various conditions are being made by accountants rather than patients and doctors. From an economist's standpoint, the incentives are clear: The ethical problems of HMO medicine flow from its very design …. In the HMO system of prepayment, every dollar of revenue is also a potential dollar of profit if it is not spent on direct patient care—an incentive, or at best a temptation, not just to economize on care but to skimp on it. (Cadette, 1998, 1) Indeed, in one study of 14 quality of care indicators, for-profit HMO plans performed significantly worse than not-for-profit plans on all 14 of them (Himmelstein et al., 1999).1 Many politicians and policy analysts see legislation as the solution to these problems. Some legislation attempts to give patients “rights”, such as the right to stay in the hospital for at least n days after delivering a baby. Other legislation suggests allowing patients the right to sue their HMO for damages if “proper” treatment is not given and also tries to define “proper treatment”. In this article we examine credence goods in the context of health care and propose a market-based solution for the under-treatment problem with HMOs while simultaneously avoiding the overtreatment problem associated with FFS providers. We explore the idea of an HMO bundling a life insurance contract with health services. This contract places the incentive for preserving the patient's life squarely in the hands of the HMO. A novel feature of the proposed solution is that it allows the consumer to choose among a continuum of treatment levels, rather than one “standard” level of service.2 In Section 2 we outline the previous research on credence goods, pointing out several potential solutions to the problem. In Section 3, we discuss the special case of health care and why previously proposed solutions are problematic in this setting. In Section 4, we derive the consumer's desired level of treatment in a simple model and discuss how this desired level differs from the level of care provided by an HMO. In Section 5, we explore how a consumer could induce an HMO to provide various levels of care through a life insurance contract and consider the consumer's maximization problem in detail in Section 6. In Section 7 we discuss the results and implications, followed by the conclusion in Section 8.

نتیجه گیری انگلیسی

Previous work on credence goods has relied on strong assumptions that sometimes contradict the definition of a credence good in order to find a solution to the problem. In addition, standard solutions to information problems do not appear to work well with credence goods in general, and in the healthcare arena in particular. While optimists declare that information and reputation can make these markets function efficiently, modern-day charlatans continue to make millions on sham cures for weight loss and cancer. Contracting for results rather than treatment may be an improvement. The option of buying life insurance from a consumer's HMO appears to be one way to ensure that honest effort is provided in health care. By “selling the store” to the HMO, the incentives for life preservation are placed in the hands of the health care provider. The life insurance policy gives the health care provider an incentive to improve the health of the consumer to a specified level related to the size of the contract. This level of health can be reached in this model, even in cases where the consumer does not know his initial level of health. Including intergenerational benevolence and risk-aversion in the consumer's utility function would only increase the willingness of consumers to pay for the life insurance wedded to this idea, and hence it improves the practicality of this solution to the credence goods problem in health care.

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