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Patient Dumping, Outlier Payment, and Optimal Healthcare Payment Policy under Asymmetric Information

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  • Tsuyoshi Takahara

Abstract

We analyze the rationale for official authorization of patient dumping in the prospective-payment policy framework. We show that when the insurer designs the healthcare payment policy to let hospitals dump high-cost patients, there is a trade-off between the disutility of dumped patients (changes in hospitals' rent extracting due to low-severity patients) and the shift in the cost-reduction effort level for high-severity patients. We also clarify the welfare-improving conditions by allowing hospitals to dump high-severity patients. Finally, we show that if the efficiency of the cost-reduction effort varies by much and the healthcare payment cost is large, or if there exist many private hospitals, the insurer can improve social welfare in a wider environment.

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  • Tsuyoshi Takahara, 2013. "Patient Dumping, Outlier Payment, and Optimal Healthcare Payment Policy under Asymmetric Information," ISER Discussion Paper 0891, Institute of Social and Economic Research, The University of Osaka.
    • Handle: RePEc:dpr:wpaper:0891
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    References listed on IDEAS

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