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The “Weisbrod Quadrilemma” revisited: insurance incentives on new health technologies

Costa-Font, Joan ORCID: 0000-0001-7174-7919, McGuire, Alistair and Serra-Sastre, Victoria (2012) The “Weisbrod Quadrilemma” revisited: insurance incentives on new health technologies. Geneva Papers on Risk and Insurance: Issues and Practice, 37 (4). pp. 678-695. ISSN 1018-5895

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Identification Number: 10.1057/gpp.2012.37


The effect of insurance expansion on the diffusion of new technologies is not a well-understood phenomenon. Arguably, an expansion of insurance coverage provides a motivation for R&D investment in medical technologies. Although risk pooling through insurance gives rise to greater affordability for existing treatments and becomes a volume driver of new treatments, it may also influence provider reimbursement through a monopsony purchaser effect and related cost control measures. However, the impact that insurance has on technology availability and R&D investment, and more generally on the adoption of new technologies, remains an unexplored empirical question. This paper presents evidence of a link between insurance and technology diffusion using OECD panel data and taking advantage of a dynamic specification structure. Our empirical estimates indicate that higher degrees of private expenditure on health care correlate with higher levels of R&D in health care, consistent with the hypothesis forwarded by Weisbrod that increasing insurance coverage boosts technology adoption. However, our findings also suggest that increasing public funding of health care appears to lower technological adoption, which is, of course, consistent with the exercising of monopsony power and an objective of cost containment.

Item Type: Article
Official URL:
Additional Information: © 2012 Palgrave Macmillan
Divisions: European Institute
Social Policy
Centre for Economic Performance
LSE Health
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HC Economic History and Conditions
R Medicine > R Medicine (General)
JEL classification: I - Health, Education, and Welfare > I1 - Health > I11 - Analysis of Health Care Markets
Date Deposited: 08 Oct 2012 12:06
Last Modified: 06 Jan 2024 04:18

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