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Incentives and Insurance

2. How to Pay Physicians?. 1. Salary Fixed payment2. Fee-for-Service Fee for each service provided3. Blended Model Fixed payment plus percent of fee for each service. Overview. Example of principal-agent relationshipThe agent (physician) provides a costly action (medical services) t

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Incentives and Insurance

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    1. Class 2 Incentives and Insurance

    2. 2 How to Pay Physicians? 1. Salary Fixed payment 2. Fee-for-Service Fee for each service provided 3. Blended Model Fixed payment plus percent of fee for each service

    3. Overview Example of principal-agent relationship The agent (physician) provides a costly action (medical services) that affects an outcome that the principal (Ministry of Health) cares about (patients health) in exchange for a reward (physician pay) Contract = {action, reward} We wish to find the best contract possible 3

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