Optimal Regulation of Multiply-Regulated Industries: The Case of Physician Services / John A. Rizzo, Jody L. Sindelar.

Format:

Book

Author/Creator:

Rizzo, John A.

Contributor:

National Bureau of Economic Research.

Sindelar, Jody L.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4822.

NBER working paper series no. w4822

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Optimal Regulation of Multiply-Regulated Industries

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1994.

Summary:

This paper models the physician services market which is regulated by two government agencies. The Health Care Financing Administration (HCFA) sets Medicare physician fees through the newly implemented Resource Based Relative Value Scale (RBRVS). The Agency for Health Care Policy and Research (AHCPR) sets practice guidelines for quality. We analyze welfare losses which occur when agencies fail to coordinate their regulatory activities. Specifically, we consider the welfare impacts for cost, quality, practice characteristics, and quantity of care. Perceived ills in the market for physician services, such as excessive expenditures and overly intensive treatment, may be traced to coordination failures. Thus, even if physicians were to act as perfect agents for their patients, and even if moral hazard were to be eliminated, coordination failure could cause the critical problems associated with the physician services market to persist. Although the model is applied to the market for physician services, it can be readily generalized to other settings involving multiple regulators.

Notes:

Print version record

August 1994.