The Economics of Information in the Health Care Market

Arizona State University-Tempe Campus, Tempe AZ

Investigators

Abstract

DESCRIPTION (provided by applicant): The purpose of this research is to examine provider behavior from a theoretical and empirical perspective and to develop a method of quantifying and predicting provider responses to legislative and market-based incentives. The proposed study examines provider behavior in response to proposed legislation and policy intended to improve the quality of care and health outcomes. With increased attention on the need for more provider autonomy and patient involvement in the provision of health care services, little attention has been given to the issue of whether these changes will result in an increase in the quality of care or simply in an increase in utilization without an improvement in quality. The goals of the research are: (1) to assess the efficiency and social welfare under common health insurance contracts including various market-based and regulatory practice incentives and extend the model to workers? compensation insurance; (2) to develop a model of the optimal contracting relationship between the patient, health care provider, and payer when the provider is the "expert" in the diagnosis and treatment of the patient; (3) to develop an analytical framework for examining provider behavior in response to legislative, regulatory and market-based changes to practice incentives; and (4) to predict the effect of relaxing utilization constraints on provider practice patterns, including quantity and mix of health care services and to quantify the effect on health care expenditures. The proposed study will provide policy makers, health insurers and workers? compensation insurers with information needed to assess the effects of relaxing utilization constraints on provider behavior. This study will examine the changes in utilization attributed to "demand inducement" versus quality of care and will quantify the changes in services and associated costs.