Duke 2008 | ASHE | Equity and Efficiency in Health and Healthcare

Description: Patients typically have much less information about treatment options and costs than physicians, and neither physicians nor insured patients are necessarily (directly) paying those costs. Asymmetric information and third-party payment provide a rationale for regulating and "managing" physician services. We have organized a session examining the market for physician services and the impact of regulation. First, Cutler, Huckman, and Kolstad examine the effects of certificate-of-need (CON) laws which limit entry and competition in physician services. They find evidence that the repeal of CON increased both the quantity and quality of certain services, but also created additional fixed costs. Second, Dranove and Ramanarayanan examine whether market forces limit the ability of physicians to exploit information asymmetries. Third, Kolstad examines the relative role of extrinsic and intrinsic motivation in determining responses by physicians to quality report cards.