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Overtreatment and benevolent provider moral hazard: evidence from South African doctors

Lagarde, Mylène ORCID: 0000-0002-5713-2659 and Blaauw, Duane (2022) Overtreatment and benevolent provider moral hazard: evidence from South African doctors. Journal of Development Economics, 158. ISSN 0304-3878

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Identification Number: 10.1016/j.jdeveco.2022.102917

Abstract

Overtreatment is widespread in health, with potentially dire consequences for patients, health systems and public health. It may be fueled by providers when they do not bear the cost of treatment (moral hazard), even they do not profit financially from it (i.e. benevolent providers). We test this hypothesis by creating an exogeneous change in the incentives faced by private doctors in South Africa. We find that provider moral hazard has no effect on overtreatment in volume but fuels overtreatment in cost. By contrast, when they bear the marginal treatment cost, doctors choose cheaper drug. While these results suggest that provider moral hazard contributes to overtreatment in primary care, we consider other plausible channels, such as responses to a perceived demand for high-quality drugs or market segmentation. We discuss the potential scope for supply-side cost-sharing incentives to reduce inefficiency in future health system reforms in South Africa.

Item Type: Article
Official URL: https://www.sciencedirect.com/journal/journal-of-d...
Additional Information: © 2022 The Authors
Divisions: Health Policy
Subjects: R Medicine > RA Public aspects of medicine > RA0421 Public health. Hygiene. Preventive Medicine
JEL classification: C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C93 - Field Experiments
D - Microeconomics > D6 - Welfare Economics > D64 - Altruism
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources; Human Development; Income Distribution; Migration
Date Deposited: 16 Jun 2022 10:51
Last Modified: 29 Jun 2022 07:51
URI: http://eprints.lse.ac.uk/id/eprint/115383

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