Incentives and social behaviors in public and private health care
OA Version
Citation
Abstract
This dissertation consists of three essays in health economics. In the first chapter, I apply a gift-exchange model to study patients' and physicians' decisions on health care provision. Patients bribing physicians is rampant in the public health sector in China. Although such forms of bribery are common, there is weak law enforcement against it. In the public system, a physician receives a fixed salary and additional payments from patients (the bribes). A guilt effect from violating professional norms limits the size of informal payments. In the private system, the guilt effect vanishes because of the legalization of payments. Without receiving the fixed salary, the physician in the private system abandons patients who offer low payments. The distribution of patients' wealth levels and the physician's outside option affect the relative welfare in each system. If too many poor patients are left behind, the regulator will support the public system.
In the second chapter, I develop a multi-period model to analyze and compare patients' decisions on medicine use. Excessive medicine use may raise pharmaceutical costs due to microbes becoming drug-resistant. This is an externality because some patients’ overuse may affect rest of the population. Two types of patients exist in this model. Forward-looking patients recognize the negative externality; myopic patients ignore it. I study how decisions of forward-looking and myopic patients interact in a multi-period model. I assume that future pharmaceutical costs will increase in the current average consumption quantity. Because of the free-riding problem, even forward-looking patients tend to overconsume because they cannot avoid facing myopic patients who ignore the price increase. A perfectly competitive market with marginal cost pricing is inefficient due to patients' over-consumption. I show that a monopolist's higher prices reduce consumption and mitigate excessive medicine use. If negative externality is strong, monopoly may result in higher social welfare than perfect competition.
In the third chapter, I focus on patients' self-treatment decisions on antibiotics. Starting in 2010, the Chinese government implemented a series of national health care reforms to ensure accessible and affordable care. The Chinese government chose several pilot areas for system reforms, and there were staggered implementations. In this study, I use ongoing national survey data from the China Health and Retirement Longitudinal Study (CHARLS) to analyze the impact of reform on patients' self-treatment behavior and on the severity of antibiotic abuse in China. Through a combination of propensity score matching and difference-in-difference methods, I find that although reform effectively reduces average monthly medical expenditures for people living within pilot areas, it is ineffective in limiting people's self-medication on antibiotics. Surprisingly, people living in pilot areas more likely use antibiotics after reform.