Regulated medical fee schedule of the Japanese health care system.
This study presents a theoretical framework for examining the effect of the Japanese government-regulated medical price schedule, 'Shinryo-Houshu-Seido,' on the behavior of medical providers. In particular, we discuss the optimal rule of this price schedule for the regulator, taking into account information asymmetry between the regulator and providers. Our simple model predicts that heterogeneous providers either under-provide or over-provide medical inputs in comparison with the socially optimal outcome. Moreover, our results show that when the allocated budget is reduced to a certain level, even the second-best outcome becomes unachievable, no matter how the price schedule is regulated. While the limited budget size is shown to have a clear negative effect on social welfare, we suggest that the prospect of obtaining the second-best outcome is left to negotiation between the regulator and the budget allocator.
Graduate School of International Relations, International University of Japan, 777 Kokusai-cho, Minami-Uonuma, Niigata, 949-7277, Japan, kakinaka@iuj.ac.jp.
Makoto
M
Kakinaka
Ryuta Ray
RR
Kato
D002017:Budgets; D003695:Delivery of Health Care; D005249:Fees and Charges / Q000331:legislation & jurisprudence*; D007564:Japan; D008962:Models, Theoretical; D010818:Practice Patterns, Physicians'