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Discontinuous system of allowances: The response of prosocial health-care professionals

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  • Hernández-Pizarro, Helena M.
  • Nicodemo, Catia
  • Casasnovas, Guillem López

Abstract

This paper examines the unintended strategic effects of non-linear incentives in public policies. A system of health care subsidies structured into discrete intervals may lead to strategic behaviour. We provide new evidence on this issue, focusing on a case where strategic actions are taken by healthcare providers (HCPs). We show that HCPs adjust the score of claimants in long-term care needs assessments, allowing claimants to access higher levels of care benefits. This adjustment does not bring any pecuniary gain for HCPs. In a quasi-natural experimental setting –the implementation of Spanish long-term care (LTC)– we show that the distribution of the claimants' needs includes kinks around the thresholds set for the LTC system. These kinks reveal that healthcare providers adopt prosocial behaviour, helping claimants jump to a higher level of benefits without discriminating by health status, residence, or gender. By developing a new non-parametric estimator, we prove that these adjustments increase the public LTC spending, which is equivalent to moving thresholds to the left. The additional cost per adjusted claimant per annum is approximately 1000 euro on average. Finally, we also explore empirically whether the number of thresholds could affect such behaviour, by exploiting a reform that eliminated some thresholds. We find that the lower number of thresholds is associated with an increase of adjustment around the thresholds that remain.

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  • Hernández-Pizarro, Helena M. & Nicodemo, Catia & Casasnovas, Guillem López, 2020. "Discontinuous system of allowances: The response of prosocial health-care professionals," Journal of Public Economics, Elsevier, vol. 190(C).
    • Handle: RePEc:eee:pubeco:v:190:y:2020:i:c:s0047272720301122
    DOI: 10.1016/j.jpubeco.2020.104248
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    Cited by:

    1. Serrano-Alarcón, Manuel & Hernández-Pizarro, Helena & López-Casasnovas, Guillem & Nicodemo, Catia, 2022. "Effects of long-term care benefits on healthcare utilization in Catalonia," Journal of Health Economics, Elsevier, vol. 84(C).
    2. Manuel Serrano-Alarcón & Helena Hernández-Pizarro & Guillem López i Casasnovas & Catia Nicodemo, 2021. "The effect of Long-Term Care (LTC) benefits on healthcare use," Working Papers 2021-12, FEDEA.

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    More about this item

    Keywords

    Long-term care; Non-linear incentives; Needs assessment; Prosocial behaviour;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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