Financing medical specialist services in The Netherlands: Welfare implications of imperfect agency

Ed Westerhout, C. Folmer

Research output: Contribution to journalArticleScientificpeer-review

Abstract

Since 1995 the financing scheme for medical specialist services in the Netherlands has moved from a fee-for-service scheme to a capitation scheme. This paper analyzes the economic and welfare effects of this policy change. The paper adopts a numerical model that integrates demand and supply considerations and that recognizes the potential roles of moral hazard and supplier-induced demand. The paper finds that the shift in financing regime has been welfare-reducing. The policy change induced medical specialists to lower the supply of the health services which was already lower than optimal before the policy reform.
Original languageEnglish
Pages (from-to)946-958
JournalEconomic Modelling
Volume25
Issue number5
DOIs
Publication statusPublished - 2008
Externally publishedYes

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Policy change
Financing
Welfare implications
The Netherlands
Demand and supply
Welfare effects
Health services
Policy reform
Supplier-induced demand
Moral hazard
Fees
Capitation
Economic effect

Cite this

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Financing medical specialist services in The Netherlands: Welfare implications of imperfect agency. / Westerhout, Ed; Folmer, C.

In: Economic Modelling, Vol. 25, No. 5, 2008, p. 946-958.

Research output: Contribution to journalArticleScientificpeer-review

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AB - Since 1995 the financing scheme for medical specialist services in the Netherlands has moved from a fee-for-service scheme to a capitation scheme. This paper analyzes the economic and welfare effects of this policy change. The paper adopts a numerical model that integrates demand and supply considerations and that recognizes the potential roles of moral hazard and supplier-induced demand. The paper finds that the shift in financing regime has been welfare-reducing. The policy change induced medical specialists to lower the supply of the health services which was already lower than optimal before the policy reform.

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