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Physician Specialization, Market Power and Public Expenditure on Health Care – Interim Progress. Monopoly Seller of Labor. Wage. Wm. Wi. S L. Wc. D L = VMP L. MR. Lm. Li. Lc. Quantity of Labor. Monopsony Buyer of Labor. MFC. Wage. S L. Wc. W mn. VMP = D L. Lc. 0. L mn.
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Physician Specialization, Market Power and Public Expenditure on Health Care – Interim Progress
Monopoly Seller of Labor Wage Wm Wi SL Wc DL = VMPL MR Lm Li Lc Quantity of Labor
Monopsony Buyer of Labor MFC Wage SL Wc W mn VMP = DL Lc 0 L mn Quantity of Labor
Bilateral Monopoly Wage MFC MR Wm SL VMPL Wc W mn DL = MRPL Lm Lmn Lc Quantity of Labor
Hotelling Type Model of Specialization R 0 1 R 0 .25 .75 1 R 0 1
Modeling Background • Level of specialization assumed dependent on the real level of expenditure on health care, the market structure (monopoly and monopsony power), and the real level of income. • The level of specialization is defined as the number or proportion of physicians who are specialists. • The market structure is indicated in two ways, by the proportion of expenditure on health that is public spending, and by the four-part classification in the text.
The Data • OECD Database • Limited selection of countries to those with extended data, nearly from ’67 thru ‘03 • Data primarily used as proportions or natural logs of data. Included per capita income and expenditure. • Allowed tables to be constructed with “filled in” data
Example 1 First example includes ln (number of specialists) as the dependent variable. Country observation data included the class as indicated in the text – HC1 is the traditional system; HC2 is national health insurance; HC3 is national health service.
Example 2 This example includes ln (proportion of specialists relative to physicians) as Dependent variable. Country observation data included the class as indicated in the text – HC1 is the traditional system; HC2 is national health insurance; HC3 is national health service.
Summary • Existence of market power implies ambiguity with respect to realized outcomes • Specialization could be too high or low given existence of market power • Market power does not preclude either a socially optimal outcome or one that approximates the competitive outcome • These examples show more work is needed regarding model and selection of variables, and data quality.