Physician-patient Interaction and the Provision of Medical Services Under Different Co-payment Schemes

This paper investigates how physicians in Japan changed the quantity of medical services provided to patients in response to the move from a fixed to a proportional copayment system for the elderly. A physician.patient interaction model is proposed where a physician first decides the quantity of medical services. The patient then sets the number of visits. The paper empirically analyzes whether physicians actually changed the quantity of medical services associated with the co-payment scheme, and if so, in which particular services. The results indicate that a physician provides more services to patients whose co-payment would decrease following the reform, and less to patients whose co-payment would increase. This is achieved through changing the quantity of laboratory testing and/or diagnostic imaging