Medical Insurance and Free Choice of Physician Shape Patient Overtreatment

Author(s)
Steffen Huck, Gabriele Lünser, Florian Spitzer, Jean-Robert Tyran
Abstract

In a laboratory experiment designed to capture key aspects of the interaction
between physicians and patients in a stylized way, we study the effects of medical insurance and competition in the guise of free choice of physician. Medical treatment is an example of a credence good: only the physician (but not the patient) knows the appropriate treatment, and even after consulting, the patient is not sure whether he got proper treatment or got an unnecessary treatment, i.e. was overtreated. We find that with insurance, moral hazard looms on both sides of the market: patients consult more often and physicians overtreat more often than in the baseline condition. Competition decreases overtreatment compared to the baseline and patients therefore consult more often. When the two institutions are combined, competition is found to partially offset the adverse effects of insurance: most patients seek treatment, but overtreatment is moderated.

Organisation(s)
Department of Economics, Vienna Center for Experimental Economics
External organisation(s)
Wissenschaftszentrum Berlin für Sozialforschung (WZB), Accenture Deutschland
Volume
SP II 2014–307
No. of pages
44
Publication date
10-2014
Austrian Fields of Science 2012
502045 Behavioural economics
Keywords
Portal url
https://ucris.univie.ac.at/portal/en/publications/medical-insurance-and-free-choice-of-physician-shape-patient-overtreatment(8e5b2d15-d01a-471c-b1df-f21823c08719).html