Consumer Choice and Patient Selection in Health Care:

Presenter: Geir Godager, University of Oslo

Abstract

Offering patients the opportunity to choose between providers is often advocated as a goal in itself. Such policies are often assumed to result in an expansion of the individuals’ set of opportunities such that welfare of patients increase, or in "worst case", is unchanged. There are groups in the population who refrain from taking advantage of consumer choice, however. Examples are presented to illustrate that these passive groups in the population may in fact experience that their welfare is reduced as result of consumer choice expansions. The aim of this paper is to examine whether individuals who exercise their freedom of choice and actively select their health care provider are different from individuals who refrain from making this choice. This is an important research question, as evidence of systematic selection would indicate that extensions of consumer choice have implications for equitable distribution of health care services. The consumer’s decision of whether to actively choose a health care provider or to accept the provider assigned by the authorities is modelled and analyzed. The model is set up to reflect the incentive structure in force as the regular general practitioner scheme was implemented in Norwegian general practice in 2001. When this reform was implemented more than 37 % of the population refrained from participating in the provider choice process. The effects of individual and market level characteristics on the probability of utilizing the option to choose provider is estimated applying a large data set containing sociodemographic and socioeconomic information on individual consumers. There is clear evidence that individuals exercising the freedom of choice differ from the individuals who pass the decision of provider choice on to the authorities. Low income and wealth, few years of schooling and recent unemployment spells are associated with a lower probability of taking advantage of consumer choice. A policy implication of this finding is that a regulator concerned with equitable distribution of health care should also be concerned with increasing the participation rates in groups of the population where few are expected to take advantage of consumer choice.