Physicians' fees and public medical care programs.
In this article we develop and estimate a model of physicians' pricing that explicitly incorporates the effects of Medicare and Medicaid demand subsidies. Our analysis is based on a multiperiod model in which physicians are monopolistic competitors supplying services to several markets. The implications of the model are tested using data derived from claims submitted by a cohort of 1,200 California physicians during the years 1972-1975. We conclude that the demand for physician's services is relatively elastic; that increases in the local supply of physicians reduce prices somewhat; that physicians respond strategically to attempts to control prices through the customary-prevailing-reasonable system; and that price controls limit the rate of increase in physicians' prices. The analysis identifies a family of policies that recognize the monopsony power of public programs and may change the cost-access trade-off.
D005251:Fees, Medical; D008389:Marketing of Health Services / Q000191:economics; D008484:Medicaid / Q000191:economics*; D006278:Medicare / Q000191:economics*; D008962:Models, Theoretical; D011364:Professional Practice; D012456:Salaries and Fringe Benefits; D014481:United States