Copyright (c) 2014 AJC
This work is licensed under a Creative Commons Attribution 4.0 International License.
Medical Optimal Payment Mechanism Based on Principal-Agent Theory
Corresponding Author(s) : Beiling Ma
Asian Journal of Chemistry,
Vol. 26 No. 11 (2014): Vol 26 Issue 11
Abstract
In order to improve the impact of ex anti asymmetric information on the efficiency of medical insurance transactions, we apply the principal-agent theory to curable diseases for establishing a kind of Medicare transaction contract model considering that the types of agents are discrete or continuous. Based on the principle of maximizing the effectiveness of the principal, the model enables an agent to show its real technical level of medical services by selecting its favorite and corresponding contract so as to increase the insurance company’s expected utility. It is concluded that under the conditions of asymmetric information, the higher the technical level of medical services is, the lower the marginal cost is and that both the number of policy holders and the payment will increase, at least not decrease. Furthermore, compared with the conditions of symmetric information, there are downward distortions in the number of policy holders for all types of agents except the highest technical type and all types of agents can obtain strictly positive information rent except the lowest technical type. Therefore, under asymmetric information, the sub optimal contracts designed by our model can suppress the lower technical types of agents while encourage the higher technical types of agents, which means this model can maximize the expected utility of principal on the participation and incentive compatibility constraints of agents under asymmetric information.
Keywords
Download Citation
Endnote/Zotero/Mendeley (RIS)BibTeX
- I. Alger and C.- Albert Ma, J. Econ. Behav. Organ., 50, 225 (2003); doi:10.1016/S0167-2681(02)00049-5.
- K.J. Arrow, Am. Econ. Rev., 53, 941 (1963).
- G.B. Hickson, W.A. Altemeier and J.M. Perrin, Pediatrics, 80, 744 (1987).
- A. Krasnik, P.P. Groenewegen, P.A. Pedersen, P. von Scholten, G. Mooney, A. Gottschau, H.A. Flierman and M.T. Damsgaard, BMJ, 300, 1698 (1990); doi:10.1136/bmj.300.6741.1698.
- U.G. Gerdtham and B. Jonsson, International Comparisons of Health Expenditure: Theory, Data and Econometric Analysis, Handbook of Health Economics, vol. 1, pp. 11-53 (2000).
- S. Kwon, Health Policy Plan., 18, 84 (2003); doi:10.1093/heapol/18.1.84.
- M. Trottmann, P. Zweifel and K. Beck, J. Health Econ., 31, 231 (2012); doi:10.1016/j.jhealeco.2011.10.004.
- S. Guterman, P.W. Eggers, G. Riley, T.F. Greene and S.A. Terrell, Health Care Financ. Rev., 9, 67 (1988).
- S.H. Altman and M.A. Rodwin, J. Health Polit. Policy Law, 13, 323 (1988); doi:10.1215/03616878-13-2-323.
- J. Holahan and J.L. Palmer, J. Health Polit. Policy Law, 13, 53 (1988); doi:10.1215/03616878-13-1-53.
- R. Ellis and T. McGuire, J. Health Econ., 7, 215 (1988); doi:10.1016/0167-6296(88)90026-4.
- G.C. Pope, J. Health Econ., 9, 237 (1990); doi:10.1016/0167-6296(90)90045-5.
- T. Stefos, N. LaVallee and F. Holder, Health Serv. Res., 27, 239 (1992).
- G. Akerlof, Q. J. Econ., 84, 488 (1970); doi:10.2307/1879431.
- R. Wilson, The Structure of Incentives for Decentralization Under Uncertainty, La Decision, Centre National De Le Recherche Scientifique, Paris (1969).
- M. Spence and R. Zechhauser, Am. Econ. Rev., 61, 380 (1971).
- S. Ross, Am. Econ. Rev., 63, 134 (1973).
- J. Mirrlees, in eds.: M. Balch, D. McFadden and S.-Y. Wu, Notes on Welfare Economics, Information and Uncertainty. In Essays on Economics Behaviour under Uncertainty, North-Holland, Amsterdam (1974).
- J. Mirrlees, Bell J. Econ., 7, 105 (1976); doi:10.2307/3003192.
- B. Holmstrom, Bell J. Econ., 10, 74 (1979); doi:10.2307/3003320.
- J.J. Laffont and D. Martimort, The Theory of Incentives (1st) The Principal-Agent Model, Princeton University Press, New Jersey, pp. 39‑57, 144-148 (2001).
References
I. Alger and C.- Albert Ma, J. Econ. Behav. Organ., 50, 225 (2003); doi:10.1016/S0167-2681(02)00049-5.
K.J. Arrow, Am. Econ. Rev., 53, 941 (1963).
G.B. Hickson, W.A. Altemeier and J.M. Perrin, Pediatrics, 80, 744 (1987).
A. Krasnik, P.P. Groenewegen, P.A. Pedersen, P. von Scholten, G. Mooney, A. Gottschau, H.A. Flierman and M.T. Damsgaard, BMJ, 300, 1698 (1990); doi:10.1136/bmj.300.6741.1698.
U.G. Gerdtham and B. Jonsson, International Comparisons of Health Expenditure: Theory, Data and Econometric Analysis, Handbook of Health Economics, vol. 1, pp. 11-53 (2000).
S. Kwon, Health Policy Plan., 18, 84 (2003); doi:10.1093/heapol/18.1.84.
M. Trottmann, P. Zweifel and K. Beck, J. Health Econ., 31, 231 (2012); doi:10.1016/j.jhealeco.2011.10.004.
S. Guterman, P.W. Eggers, G. Riley, T.F. Greene and S.A. Terrell, Health Care Financ. Rev., 9, 67 (1988).
S.H. Altman and M.A. Rodwin, J. Health Polit. Policy Law, 13, 323 (1988); doi:10.1215/03616878-13-2-323.
J. Holahan and J.L. Palmer, J. Health Polit. Policy Law, 13, 53 (1988); doi:10.1215/03616878-13-1-53.
R. Ellis and T. McGuire, J. Health Econ., 7, 215 (1988); doi:10.1016/0167-6296(88)90026-4.
G.C. Pope, J. Health Econ., 9, 237 (1990); doi:10.1016/0167-6296(90)90045-5.
T. Stefos, N. LaVallee and F. Holder, Health Serv. Res., 27, 239 (1992).
G. Akerlof, Q. J. Econ., 84, 488 (1970); doi:10.2307/1879431.
R. Wilson, The Structure of Incentives for Decentralization Under Uncertainty, La Decision, Centre National De Le Recherche Scientifique, Paris (1969).
M. Spence and R. Zechhauser, Am. Econ. Rev., 61, 380 (1971).
S. Ross, Am. Econ. Rev., 63, 134 (1973).
J. Mirrlees, in eds.: M. Balch, D. McFadden and S.-Y. Wu, Notes on Welfare Economics, Information and Uncertainty. In Essays on Economics Behaviour under Uncertainty, North-Holland, Amsterdam (1974).
J. Mirrlees, Bell J. Econ., 7, 105 (1976); doi:10.2307/3003192.
B. Holmstrom, Bell J. Econ., 10, 74 (1979); doi:10.2307/3003320.
J.J. Laffont and D. Martimort, The Theory of Incentives (1st) The Principal-Agent Model, Princeton University Press, New Jersey, pp. 39‑57, 144-148 (2001).