Health Care Insurance Payment Policy When the Physician and Patient May Collude

32 Pages Posted: 22 May 2015

See all articles by Yaping Wu

Yaping Wu

Southwestern University of Finance and Economics (SWUFE)

David Bardey

Universidad de los Andes, Colombia - Department of Economics

Sanxi Li

Toulouse School of Economics

Date Written: April 10, 2015

Abstract

This paper analyzes the three-party contracting problem among the payer, the patient and the physician when the patient and the physician may collude to exploit mutually beneficial opportunities. Under the hypothesis that side transfer is ruled out, we analyze the mechanism design problem when the physician and the patient submit the claim to the payer through a reporting game. To induce truth telling by the two agents, the weak collusion-proof insurance payment mechanism is such that it is sufficient that one of them tells the truth. Moreover, we identify trade-offs of a different nature faced by the payer according to whether incentives are placed on the patient or the physician. We also derive the optimal insurance scheme for the patient and the optimal payment for the physician. Moreover, we show that if the payer is able to ask the two parties to report the diagnosis sequentially, the advantage of the veto power of the second agent allows the payer to achieve the first-best outcome.

Keywords: collusion, falsification, health care insurance, physician payment

JEL Classification: I18, D82

Suggested Citation

Wu, Yaping and Bardey, David and Li, Sanxi, Health Care Insurance Payment Policy When the Physician and Patient May Collude (April 10, 2015). Documento CEDE No. 2015-19, Available at SSRN: https://ssrn.com/abstract=2608678 or http://dx.doi.org/10.2139/ssrn.2608678

Yaping Wu (Contact Author)

Southwestern University of Finance and Economics (SWUFE) ( email )

55 Guanghuacun St,
Chengdu, Sichuan 610074
China

David Bardey

Universidad de los Andes, Colombia - Department of Economics ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976
Colombia

Sanxi Li

Toulouse School of Economics ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

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