Discountinous System of Allowances: The Response of Prosocial Health-Care Professionals

38 Pages Posted: 5 Oct 2020

See all articles by Helena M Hernandez-Pizarro

Helena M Hernandez-Pizarro

Universitat Pompeu Fabra - Department of Economics and Business

Catia Nicodemo

University of Oxford - Centre for Health Service Economics and Organisation; University of Oxford - Department of Economics

Guillem Casasnovas

Universitat Pompeu Fabra

Abstract

This paper examines the unintended strategic effects of non-linear incentives in public policies. A system of health care subsidies structured in discrete intervals may lead to strategic behaviour. We provide new evidence on this issue, focusing on a case where the strategic actions are taken by healthcare providers (HCPs). We show that HCPs adjust the score of claimants in long-term care needs assessments, giving them the opportunity to access higher levels of care benefits. This adjustment does not bring any pecuniary gain for HCPs. By using a quasi-natural experimental setting –the implementation of Spanish long-term care (LTC)– we show that the distribution of the claimants' needs includes kinks around the thresholds set for the LTC system. These kinks reveal that healthcare providers adopt prosocial behaviour, helping claimants jump to a higher level of benefits without discriminating by health status, residence, or gender. By developing a new non-parametric estimator, we prove that these adjustments lead to a welfare loss. The additional cost per adjusted claimant per annum is approximately 1000 euro on average. We finally propose an alternative continuous system to allocate LTC benefits that could mitigate the prosocial behaviour of healthcare providers.

Keywords: needs assessment, non-linear incentives, long-term care, prosocial behaviour

JEL Classification: D63, D82, D61, H510, I380

Suggested Citation

Hernandez-Pizarro, Helena M and Nicodemo, Catia and Casasnovas, Guillem, Discountinous System of Allowances: The Response of Prosocial Health-Care Professionals. IZA Discussion Paper No. 13758, Available at SSRN: https://ssrn.com/abstract=3704141 or http://dx.doi.org/10.2139/ssrn.3704141

Helena M Hernandez-Pizarro (Contact Author)

Universitat Pompeu Fabra - Department of Economics and Business ( email )

Barcelona
Spain

Catia Nicodemo

University of Oxford - Centre for Health Service Economics and Organisation ( email )

Oxford
United Kingdom

University of Oxford - Department of Economics ( email )

10 Manor Rd
Oxford, OX1 3UQ
United Kingdom

Guillem Casasnovas

Universitat Pompeu Fabra

Ramon Trias Fargas, 25-27
Barcelona, E-08005
Spain

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