9453839 Gal-OR This research will develop several theoretical models aimed at understanding the state of the health care market. The models are developed to capture the more realistic features of the health care market, including those measures that are proposed by the Health Care Reform Task Force. The health care market consists of patients, providers, insurance companies, "limited provider plans", such as HMO's and PPO's, and government agencies. Given this complexity, the study is designed to pay particular attention to institutional details. One part of the study examines the extent to which the provider focuses on quality versus price competition with other providers. Another part examines the implications of the reimbursement rules and the malpractice law upon the choice of a particular treatment that is selected by the provider. The last part relates to the design of an optimal reimbursement rule aimed at inducing the provider to allocate appropriate resources to improved quality and improved efficiency in delivering the service to patients. This study is important because it examines different dimensions of the decisions that could be made by health care providers. Moreover, this framework makes it possible to evaluate the implications of various proposals that are currently being considered and to predict how the decision- making process efffects health care costs, the quality of care provided to patients, and the size of the uninsured population.
