Template-type: ReDIF-Paper 1.0
Author-Name: Makoto Kakinaka
Author-Name-First: Makoto
Author-Name-Last: Kakinaka
Author-Email: kakinaka@iuj.ac.jp
Author-Workplace-Name: International University of Japan
Author-Workplace-Homepage: http://www.iuj.ac.jp/
Author-Name: Ryuta Ray Kato
Author-Name-First: Ryuta
Author-Name-Last: Kato
Author-Email: kato@iuj.ac.jp
Author-Workplace-Name: International University of Japan
Author-Workplace-Homepage: http://www.iuj.ac.jp/
Title: Regulated Medical Fee Schedule of the Japanese Health Care System
Abstract: We present a theoretical framework for investigating the effect of the Japanese government-regulated medical fee schedule, 'Shinryo-Houshu-Seido,' on the behavior of medical providers. We also discuss the optimal rule of this fee schedule for the regulator, taking into account information asymmetry between the regulator and providers. Our simple model predicts that under the current fee schedule heterogeneous providers either under-provide or over-provide medical inputs, depending on the price. Furthermore, our analytical results show that when the allocated budget is reduced to a certain level, even the second-best outcome becomes unachievable, no matter how the fee schedule is regulated. While we demonstrate that the global budget caps or 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 without complete information on heterogeneous providers is left to negotiation between the regulator and the budget allocator.
Classification-JEL: 
Length: 27 pages
Creation-Date: 2011-05
Number: EMS_2011_13
File-URL: https://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2011_13.pdf
File-Format: Application/pdf
File-Function: First version, 2011
File-Size: 382KB
Keywords: asymmetric information, budget caps, regulated medical fee schedule, Japanese health care system
Handle: RePEc:iuj:wpaper:EMS_2011_13