Information Disclosure and the Equivalence of Prospective Payment and Cost Reimbursement
نویسندگان
چکیده
A health care provider chooses medical service quality and cost-reduction e§ort. Both choices are noncontractible. An insurer observes both quality and cost e§ort, and may credibly disclose them to consumers. In prospective payment, the insurer fully discloses care quality, and sets a prospective payment price. In cost reimbursement, the insurer discloses a value index, a weighted average of quality and cost e§ort, and pays a margin above cost. The Örst-best quality and cost e§ort can be implemented by prospective payment and by cost reimbursement.
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