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Optimal payment systems for health services
1Department of Economics, Boston University, MA 02215.
Journal of Health Economics
|December 10, 1989
Summary
Optimal health payment systems balance cost sharing and reimbursement to resolve conflicts between patient demand and provider supply. This approach maximizes consumer welfare by aligning incentives in healthcare consumption.
Area of Science:
- Health Economics
- Healthcare Management
- Health Policy
Background:
- Demand-side cost sharing and supply-side reimbursement are key policy levers.
- Current systems may not align patient and provider incentives for optimal care quantity.
Purpose of the Study:
- To model the conflict arising from misaligned incentives in healthcare payment systems.
- To determine optimal insurance and reimbursement strategies that maximize consumer welfare.
Main Methods:
- Utilized bargaining theory to model conflict resolution between patients and providers.
- Developed a model analyzing the interplay of insurance and reimbursement plans.
- Focused on risk-averse consumers and their welfare.
Main Results:
- Optimal payment systems involve conflict, not consensus, between patients and providers.
- The model identifies specific insurance and reimbursement combinations that address incentive divergences.
- Consumer welfare is maximized when payment systems resolve discrepancies between desired demand and supply.
Conclusions:
- Healthcare payment systems require careful design to manage inherent conflicts.
- Optimizing insurance and reimbursement is crucial for enhancing consumer welfare in healthcare.
- Bargaining theory provides a framework for understanding and improving healthcare payment outcomes.
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