The Impact of Regulation and Financial Incentives on Cost-of-Illness

by Dana P. Goldman, Paul Gertler, James P. Smith


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Economic costs will vary with the health care environment, yet a cost-of-illness estimate necessarily depends on the status quo. This intransigence may limit policymakers' ability to draw meaningful inferences from such a study. This paper considers the behavioral and regulatory assumptions that underlie cost-of-illness estimates. The authors present several case studies which reveal the extent to which cost-of-illness can vary across regulatory regimes, and they show that costs can be quite sensitive to patient and provider financial incentives.

This report is part of the RAND Corporation Draft series. The unrestricted draft was a product of the RAND Corporation from 1993 to 2003 that represented preliminary or prepublication versions of other more formal RAND products for distribution to appropriate external audiences. The draft could be considered similar to an academic discussion paper. Although unrestricted drafts had been approved for circulation, they were not usually formally edited or peer reviewed.

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