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KMID : 1170320110170010173
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Korean Journal of Health Economics and Policy
2011 Volume.17 No. 1 p.173 ~ p.211
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Theoretical Analysis on Social Welfare Effect of Differentiation in Medical Fee Schedules
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Lee Jae-Hee
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Abstract
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Since the National Health Insurance Corporation(NHIC), the integrated single payer system has begun in July of 2000 in Korea, it has been considered that it has successfully achieved the dual goals of benefit expansion and cost containment, using the increased bargaining power. However, the NHIC may face the problem of insufficient innovation as most other countries with a single payer system generally has. In this paper I introduce the mechanism of differentiated fee schedule devised using Myerson(1979)’s Revelation Principle and show it outperforms the system of existing uniform fee schedule in terms of insurer’s welfare. Especially the "feasible optimal fee schedule" developed in this paper shows the case in which Pareto Improvement can be made where the insurer’s welfare can be increased with healthcare provider’s profit unchanged.
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KEYWORD
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Single payer system, Monopsony, Optimal Medical Fee schedule
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