Models for financing dental services. A review

The aim of this review article is to give a brief description of the most important models for financing dental services, and then to describe the effects that the different models can have on patients' and dentists' behaviour. The advantages and disadvantages of the different models will be discussed. The first section focuses on the relationship between insured people and insurance providers. The justifications for a private insurance scheme and a public insurance scheme for dental treatment are discussed. A purely private insurance market for dental services will fail. This is because the benefits of a private dental insurance scheme are few in relation to the costs of having insurance, and because of the problem of adverse selection. There are also problems with public insurance schemes, for example, high transaction costs for collection of taxes and problems with cost containment as a result of moral hazard. The second section focuses on the relationship between the dentist and the patient, more specifically on how different remuneration schemes influence dentists' behaviour. The advantages and disadvantages of three types of remuneration scheme are discussed: fixed salary, per capita remuneration and pure fee-for-item remuneration. One important conclusion is that per capita payments secure effectiveness, while fee-for-item payments secure quality. With per capita payments there is a potential for patient-selection and undertreatment, while cost containment is a problem with fee-for-item payments. In order to counteract the adverse side-effects of each financing system, focus should be placed on the individual dentist in relation to ethics, norms and quality control.