Physician reimbursement, time-consistency and the quality of care

We use a model of horizontal and vertical differentiation to study physicians’ incentives to provide quality in the physician-patient relationship under price regulation. If the price is the only regulatory variable, the social planner cannot implement the first-best policy. Moreover, the second-best policy is time inconsistent. Excess entry and firstbest efficient total quality provision is observed in the game without commitment. Allowing physicians to compete in prices does not solve the commitment problem since the competitive solution coincides with the time consistent outcome. In the median voter equilibrium the time consistency problem is more severe. -- In einem Modell der horizontalen und vertikalen Produktdifferenzierung werden die ärztlichen Anreize, medizinische Qualität bereitzustellen, in Gegenwart von Preisregulierung untersucht. In Gegenwart zweier strategischer Variablen kann ein ausschließlich preisregulierender sozialer Planer das erstbeste Wohlfahrtsoptimum nicht implementieren. Darüber hinaus ist das zweitbeste Wohlfahrtsoptimum nicht zeitkonsistent. Mit zeitkonsistenter Regulierung ergibt sich eine effiziente Qualität medizinischer Leistungen, jedoch eine zu hohe Arztdichte. Preiswettbewerb zwischen den Ärzten führt zur selben Allokation wie bei zeitkonsistenter Regulierung. Die Probleme des Gesundheitsmarktes lassen sich somit nicht durch mehr Wettbewerb lösen. Das Zeitkonsistenzproblem ist noch gravierender, wenn über den Preis durch eine Mehrheitsabstimmung entschieden wird. Wendet man das Modell auf den deutschen Gesundheitsmarkt an, so zeigt sich, dass die kassenärztliche Zulassung – trotz Bedarfsplanung – zu großzügig ist.Economics of health care markets,time consistency,price regulation,quality competition,spatial competition

Monopoly pricing with negative network effects: the case of vaccines

We study the market for vaccinations considering income heterogeneity on the demand side and monopoly power on the supply side. A monopolist has an incentive to exploit the external effect of vaccinations and leave the poor susceptible in order to increase the willingness to pay of the rich. Even the possibility to perfectly price discriminate does not remove this incentive. Pigouvian subsidies may even make things worse. Mandatory vaccination programs covering only the poor succeed in eradicating the disease. This offers an efficiency based rationale for distribution-oriented national or international public health interventions. -- Wir untersuchen den Markt für Impfstoffe, wobei wir Einkommensungleichheit auf der Nachfrageseite und Monopolmacht auf der Angebotsseite unterstellen. Ein Monopolist hat den Anreiz, den externen Effekt von Impfungen auszunutzen. So wird er die Armen strategisch ungeimpft lassen, um die Zahlungsbereitschaft der Reichen zu erhöhen. Selbst für den Fall der perfekten Preisdiskriminierung bleibt dieser Anreiz bestehen. Pigou Subventionen können das Marktergebnis noch verschlechtern. Staatliche Impfprogramme, die nur die Armen abdecken, können die Krankheit auslöschen. Dies liefert eine effizienzbasierte Begründung für verteilungsorientierte nationale wie internationale Interventionen in den Impfmarkt.Vaccination,monopoly pricing,price discrimination,negative network effects,Pigouvian subsidies,mandatory vaccination programs

The political economy of the German Länder deficits

We analyze the deficits of the German Länder for the period from 1960 to 2005 and test a number of hypotheses derived from the literature on the political economy of public deficits. Estimating a dynamic panel data model, we find evidence for political opportunism in the spirit of Rogoff and Sibert: German voters seem to favor fiscal discipline as debt issue is significantly lower in preelection years. As suggested by the theory, coalition governments issue significantly more debt than single party governments. There is no evidence for partisan behavior; party ideology plays a negligible role. Strategic debt issue may occur when the probability of reelection is small. Our results suggest that this kind of political instability has no impact on debt issue. -- Wir analysieren die Entwicklung der Budgetdefizite in den deutschen Bundesländern von 1960 bis 2005 und testen eine Reihe von Hypothesen, die sich aus der politökonomischen Literatur öffentlicher Defizite ableiten lassen. Im Rahmen eines dynamischen Panel-Modells finden wir Evidenz für politischen Opportunismus im Sinne von Rogoff und Sibert: Deutsche Wähler scheinen fiskalische Disziplin zu befürworten, da die Verschuldung in Vorwahljahren signifikant weniger ansteigt als in anderen Jahren. Wie die Theorie nahe legt, wächst die Verschuldung bei Koalitionsregierungen signifikant mehr als bei Alleinregierungen. Wir finden hingegen keine Belege für Partisanenverhalten, Parteiideologien spielen also eine zu vernachlässigende Rolle. Strategische Neuverschuldung könnte erfolgen, wenn die Wiederwahlwahrscheinlichkeit gering ist. Unsere Ergebnisse lassen jedoch erkennen, dass diese Art der politischen Instabilität keinen Einfluss auf die Neuverschuldung hat.Public Deficit,German Länder,Political Economy,Dynamic Panel,Data Model

Public and Private Health Insurance in Germany: The Ignored Risk Selection Problem

While risk selection within the German public health insurance system has received considerable attention, risk selection between public and private health insurers has largely been ignored. This is surprising since – given the institutional structure – risk selection between systems is likely to be more pronounced. We find clear evidence for risk selection in favor of private insurers. While private insurers are unable to select the healthy upon enrollment they manage to dump high risk individuals who then end up in the public system. This gives private insurers an unjustified competitive advantage vis-à-vis public insurer. A risk adjusted compensation would mitigate this advantage.risk selection, public and private health insurance, risk adjustment

The Political Economy of the German Länder Deficits

We analyze the deficits of the German Länder for the period from 1960 to 2000 and test a number of hypotheses derived from the literature on the political economy of public expenditures and public deficits. Estimating a dynamic panel data model, we find evidence for political opportunism of the Rogoff/Sibert-type. German voters seem to favor fiscal discipline as debt issue is significantly lower in pre-election years. There is no evidence for partisan behavior. Party ideology thus plays a negligible role. As suggested by the theory, coalition governments issue more debt. This effect is, however, not statistically significant. If the probability of reelection is small, the incumbent government may find it beneficial to issue more debt. We consider four different approximations of the reelection probability but find evidence for none of them. --Public Debt,Political Economy,German Länder,Dynamic Panel Data Model

On Competition and Regulation in Health Care Systems

Health care systems are under reform in many countries. This typically involves a shift towards more competition. But still, markets are highly regulated. This study analyzes competition and regulatory measures in four important fields using the modern tools of microeconomic theory and microeconometrics. The book demonstrates how price regulation interacts with the quality of care and shows that non-price competition amongst providers affects the social desirability of a gatekeeping system. Using data from the German Socio-Economic Panel, the conventional wisdom of risk selection by German sickness funds is challenged

Physician reimbursement, time-consistency and the quality of care

"We use a model of horizontal and vertical differentiation to study physicians' incentives to provide quality in the physician-patient relationship under price regulation. If the price is the only regulatory variable, the social planner cannot implement the first-best policy. Moreover, the second-best policy is time inconsistent. Excess entry and firstbest efficient total quality provision is observed in the game without commitment. Allowing physicians to compete in prices does not solve the commitment problem since the competitive solution coincides with the time consistent outcome. In the median voter equilibrium the time consistency problem is more severe." (author's abstract)"In einem Modell der horizontalen und vertikalen Produktdifferenzierung werden die ärztlichen Anreize, medizinische Qualität bereitzustellen, in Gegenwart von Preisregulierung untersucht. In Gegenwart zweier strategischer Variablen kann ein ausschließlich preisregulierender sozialer Planer das erstbeste Wohlfahrtsoptimum nicht implementieren. Darüber hinaus ist das zweitbeste Wohlfahrtsoptimum nicht zeitkonsistent. Mit zeitkonsistenter Regulierung ergibt sich eine effiziente Qualität medizinischer Leistungen, jedoch eine zu hohe Arztdichte. Preiswettbewerb zwischen den Ärzten führt zur selben Allokation wie bei zeitkonsistenter Regulierung. Die Probleme des Gesundheitsmarktes lassen sich somit nicht durch mehr Wettbewerb lösen. Das Zeitkonsistenzproblem ist noch gravierender, wenn über den Preis durch eine Mehrheitsabstimmung entschieden wird. Wendet man das Modell auf den deutschen Gesundheitsmarkt an, so zeigt sich, dass die kassenärztliche Zulassung - trotz Bedarfsplanung - zu großzügig ist." (Autorenreferat

Gatekeeping in health care

We study the competitive effects of restricting direct access to secondary care by gatekeeping, focusing on the informational role of gatekeeping general practitioners (GPs). We consider a secondary care market with two hospitals choosing the quality and specialisation of their care. GPs perfectly observe the diagnosis of a patient and the exact characteristics of the secondary care market. Patients are either informed or uninformed when accessing the hospital market. We consider two distinct cases: first, we let the fraction of informed patients be exogenous, implying that the regulator can only influence patients' decision of consulting a GP by making this compulsory ('direct gatekeeping'). Second, we endogenise this fraction by assuming GP consultation to be costly for the patient. Then the reulator can influence the GP attendance rate through the regulated price ('indirect gatekeeping'). A main finding of the paper is that strict gatekeeping may not be socially desirable, even if it is costless.Gatekeeping; Imperfect information; Quality competition; Product differentiation; Price regulation

The political economy of the German Länder deficits

We analyze the deficits of the German Länder for the period from 1960 to 2000 and test a number of hypotheses derived from the literature on the political economy of public expenditures and public deficits. Estimating a dynamic panel data model, we find evidence for political opportunism of the Rogoff/Sibert- type. German voters seem to favor fiscal discipline as debt issue is significantly lower in pre-election years. There is no evidence for partisan behavior. Party ideology thus plays a negligible role. As suggested by the theory, coalition governments issue more debt. This effect is, however, not statistically significant. If the probability of reelection is small, the incumbent government may find it beneficial to issue more debt. We consider four different approximations of the reelection probability but find evidence for none of them

Public and Private Health Insurance in Germany: The Ignored Risk Selection Problem

While risk selection within the German public health insurance system has received considerable attention, risk selection between public and private health insurers has largely been ignored. This is surprising since - given the institutional structure - risk selection between systems is likely to be more pronounced. We find clear evidence for risk selection in favour of private insurers. While private insurers are unable to select the healthy upon enrolment they manage to dump high risk individuals who then end up in the public system. This gives private insurers an unjustified competitive advantage vis-à-vis public insurers. A risk adjusted compensation would mitigate this advantage