Cost incentives for doctors: A double-edged sword

Research output: Contribution to journalJournal articleResearchpeer-review

  • Christoph Schottmüller
If doctors take the costs of treatment into account when prescribing medication, their objectives differ from their patients' objectives because the patients are insured. This misalignment of interests hampers communication between patient and doctor. Giving cost incentives to doctors increases welfare if (i) the doctor's examination technology is sufficiently good or (ii) (marginal) costs of treatment are high enough. If the planner can costlessly choose the extent to which doctors take costs into account, he will opt for less than 100%. Optimal health care systems should implement different degrees of cost incentives depending on type of disease and/or doctor.
Original languageEnglish
JournalEuropean Economic Review
Volume61
Pages (from-to)43-58
ISSN0014-2921
DOIs
Publication statusPublished - Jul 2013

Bibliographical note

JEL classification: D82; D83; I10

ID: 45102311