Type: Working Paper
Information disclosure and the equivalence of prospective payment and cost reimbursement
Working Paper, EUI MWP, 2012/22
MA, Ching-to Albert, MAK, Henry Y., Information disclosure and the equivalence of prospective payment and cost reimbursement, EUI MWP, 2012/22 - https://hdl.handle.net/1814/23897
Retrieved from Cadmus, EUI Research Repository
A health care provider chooses medical service quality and cost-reduction effort. Both choices are non-contractible. An insurer observes both quality and cost effort, and may credibly disclose them to consumers. In prospective payment, the insurer fully discloses care quality, and sets a prospective payment price. In cost reimbursement, the insurer discloses a value index, a weighted average of quality and cost effort, and pays a margin above cost. The first-best quality and cost effort can be implemented by prospective payment and by cost reimbursement.
Cadmus permanent link: https://hdl.handle.net/1814/23897
Series/Number: EUI MWP; 2012/22