NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
loading...

Saving Lives or Saving Money? Understanding the Dual Nature of Physician Preferences

Alice Chen, Darius N. Lakdawalla

NBER Working Paper No. 21930
Issued in January 2016
NBER Program(s):Aging, Health Care, Health Economics

A longstanding literature highlights the tension between the altruism of physicians and their desire for profit. We develop new implications for how these competing forces determine pricing and utilization. Altruism encourages providers to reduce utilization in response to higher prices, but profit-maximization does the opposite. Rational physicians behave more altruistically when treating poorer patients or those facing higher medical costs, and when foregone profits are lower. These insights help explain observed heterogeneity in pricing dynamics. We show that average price elasticities vary from 0.6 to 1.1 for a given physician, depending on the patient socioeconomic status and out-of-pocket cost burden. This finding has important implications for the design of reimbursement by Medicare Parts A and B, and benefit design within Part D.

download in pdf format
   (329 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w21930

Published: A. Chen & D. Lakdawalla, 2017. "SAVING LIVES OR SAVING MONEY? UNDERSTANDING THE DUAL NATURE OF PHYSICIAN PREFERENCES," Innovation in Aging, vol 1(suppl_1), pages 1343-1343.

Users who downloaded this paper also downloaded* these:
Powell and Goldman w21858 Disentangling Moral Hazard and Adverse Selection in Private Health Insurance
Stabile and Thomson w19439 The Changing Role of Government in Financing Health Care: An International Perspective
Johnson and Rehavi w19242 Physicians Treating Physicians: Information and Incentives in Childbirth
Chen, Jalal, Hashimoto, Suen, Eggleston, Hurley, Schoemaker, and Bhattacharya w21870 Forecasting Trends in Disability in a Super-Aging Society: Adapting the Future Elderly Model to Japan
Goda, Farid, and Bhattacharya w21846 The Incidence of Mandated Health Insurance: Evidence from the Affordable Care Act Dependent Care Mandate
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us