Page 198 - Effective healthcare cost containment policies Using the Netherlands as a case study - Niek W. Stadhouders

Chapter 8
treatment intensity, the same number of patients can be treated for a lower total budget. However, we have postulated that reductions in the number of patients on the supply side are most likely. If fewer patients receive care without addressing demand for care, the supply will be insufficient to meet demand. This will manifest in patients that demand care cannot receive care. Therefore, budgeting is likely to increase waiting lists. If providers can selectively treat patients with low health status first, this may not be a major issue, but due to the difference between actual and perceived health status, patients may disproportionally oppose waiting lists. In conclusion, the model predicts that budgeting is most likely to contain total costs, increase waiting lists, reduce treatment intensity and reduce employment in healthcare, especially in non-profit, competitive markets with fixed reimbursement rates.
Increased cost sharing is often proposed as a mean to reduce costs. In the equilibrium model, cost sharing manifests in the demand equation, where higher cost sharing causes more people to refrain from seeking care. The people that refrain from seeking care may be the people that value the care least, at the margin, but due to inconsistencies between perceived health and actual health, increased cost sharing may both increase overtreatment and reduce undertreatment. Furthermore, the disutility of seeking care depends on patient income, so lower incomes are more likely to refrain from seeking care when cost sharing increases.
Cost sharing
The equilibrium equations predict that the reduction in demand leads either to increased reimbursement rates, increased treatment intensity or a reduced total budget. If providers and payer negotiate on reimbursement rates, treatment intensity may be increased or budgets may be reduced as a response to lower demand. As budget reductions require reductions in expenses (profits), while increases in treatment intensity do not, the latter may be preferred by providers. Changes in demand may have little influence on budget negotiations, only when changes in demand are known upfront by payers it may reduce the utility of contracting all providers slightly ( and thereby reduce the surplus of a positive bargaining outcome, which reduces . More likely, the budget negotiations are unaffected by changes in demand, implying that providers react to lower demand by increasing treatment intensity or increasing the reimbursement rate. In the case of block grants, hospitals may treat fewer patients for the same budget, i.e. increase (shadow) reimbursement rates. Cost sharing therefore is likely to stimulate providers to
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