The optimal negligence standard in health care under supply-side cost sharing.
This paper elaborates on the optimal negligence standard in a world where physicians choose their level of care subject to erroneous court judgements and to the degree of supply-side cost sharing. Uncertain liability in malpractice lawsuits leads physicians to provide excessive and insufficient care, which results in a loss of social welfare. The standard that maximizes welfare depends on the cost share: Under traditional, close to full cost reimbursement it is lower than the first-best level of care, while under substantial supply-side cost sharing it increases and may even exceed the first best.
Olbrich
Anja
A
Institute of Social Medicine and Health Economics (ISMHE), Otto-von-Guericke University, Leipziger Strasse 44, 39120 Magdeburg, Germany. anja.olbrich@med.ovgu.de
D017047:Cost Sharing; D003657:Decision Making; D003695:Delivery of Health Care / Q000191:economics*; D006801:Humans; D008318:Malpractice / Q000191:economics*; D010820:Physicians; D035501:Uncertainty