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Strategic sorting: the role of ordeals in health care

Published online by Cambridge University Press:  15 June 2020

Richard Zeckhauser
Affiliation:
Harvard Kennedy School, 79 John F. Kennedy St., Cambridge, MA 02138, USA
Corresponding

Abstract

Ordeals are burdens placed on individuals that yield no benefits to others; hence they represent a dead-weight loss. Ordeals – the most common is waiting time – play a prominent role in rationing health care. The recipients most willing to bear them are those receiving the greatest benefit from scarce health-care resources. Health care is heavily subsidized; hence, moral hazard leads to excess use. Ordeals are intended to discourage expenditures yielding little benefit while simultaneously avoiding the undesired consequences of rationing methods such as quotas or pricing. This analysis diagnoses the economic underpinnings of ordeals. Subsidies for nursing-home care versus home care illustrate.

Type
Symposium Article
Copyright
© The Author(s), 2020. Published by Cambridge University Press

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