What Should Macroeconomists Know About Health Care Policy?

Informal payments and patients' perceptions of the physician agency problem: Evidence from rural China

Informal payment for medical services is a common phenomenon in China. Patients make informal payments, in cash or in kind, to physicians in addition to official charges billed for medical services. This paper assesses the associations between patients' perceptions of the physician as an agent for the patient's interests (physician agency problem) and informal payment behavior. Using data of 24,000 and 6700 rural households respectively from the Health Development of Rural China Program database (collected in 2008) and Ningxia data source (collected in 2015), we find that patients' concern about physician agency problems is significantly associated with informal payments. The data shows that patients are more likely to make informal payments when they show low trust towards their physicians. For example, in the surgical cases, among patients who strongly distrusted the physicians, 17.9% (95% confidence interval [CI]:]: 13.5, 22.3) initiated informal payments, compared to 8.0% (95% CI: 5.1, 10.9) who expressed "strong trust" in their physicians. Poor communication was also significantly associated with an increase in the informal payment rate. For example, in the non-surgical setting, among the patients who rated the physicians' explaining skills as "poor," 5.9% (95% CI: 5.0, 6.9) of them made informal payments, significantly higher than the patients who rated "excellent" (of whom 1.8% made informal payments 95% CI, 0.9, 2.7). In this study, we provide an explanation for this finding: patients may initiate informal payments to physicians in order to mitigate the physician agency problem. It suggests that to mitigate informal payments, improving alignment between doctors' incentives and patients' interests would be essential.

Projecting health-care expenditure for Switzerland: further evidence against the 'red-herring' hypothesis

This paper contributes to the debate about the impact of population ageing on health-care (HC) expenditure. Some health economists claim that the commonly presumed impact of population ageing is a 'red herring'. Based on empirical studies, these authors conclude that proximity to death and not age per se matters. In projecting HC expenditure for Switzerland, the present study provides evidence that proximity to death is of marginal importance. These projections suggest that population ageing is still the most important age-related cost-driver. Moreover, morbidity outweighs mortality as a factor of HC expenditure. But most vital are non-demographic drivers such as medical progress. Thus, from the point of view of cost-benefit analysis one should even ignore costs of dying when projecting HC expenditure. Moreover, regressions might overestimate proximity to death due to systematic biases. Finally, ever-increasing HC expenditure can be slowed down by appropriate policy measures.