Study On The Game Behavior Of Interest Group And Health Institutional Change In China

Employing theories of institutional change in institutional economics etc, this thesis delves into the root cause of institutional changes in the medical sector. While focusing on its central theme:Health Institutional Change & the Game Behavior of Interest Groups, this thesis, which consists 6 parts, has made a multi-dimensional analysis on the interactive mechanisms of the health care institutional reform, where its theoretical and practical value lies.Ⅰ. Research contents:The background of subject-selection, the significance, rationale, approaches, innovations and limitations of this research are briefed in the prelude.PartⅠdefines the elementary concepts and issues such as Interest Groups, the role of government in the gaming and health care system. Government interest and institutional change are analyzed in two frameworks:1. In the national framework, institutional change is a choice between the utility of government monopoly rent and the efficiency of the micro-economic subjects; 2. In the sectoral framework, the conflicts of different sectors in grabbling government resources are analyzed to show the resource advantages and behavior strategy of each sector in the ongoing medical reform.Part 2 makes a retrospective study on the institutional changes of China's health care system, within the paradigm of economic history and comparative study. A Path Analysis is thus made on the co-evolution of "Interest Group & Institution" in health care system, along the "path" of their intrinsic logical relationship:their interaction and gaming behavior are analyzed in chorological order, while each Interest Group's "emerging—growing—maturing" progression is depicted. Part 3 constitute the focal points of this thesis, changes of two important rules guiding the health care reform of our country are analyzed empirically:first, Decentralization. Namely, local governments and microeconomic entities are empowered with transferred rights, public hospitals are empowered with various property rights characteristic of profit-making entities; Second, public financing rules have changed from unidimensional to multi-dimensional. Two empirical models provide evidence:1. General Equilibrium model, which accounts for changes of the possibility curve as a result of changing external conditions. When state rent diminish or exhaust, government—the national agent, will enforce institutional changes that prefer supply, the utility function will be reoriented from rent-Preference to efficiency-Preference.2. Boxed-Pigs game-model, which is a partial equilibrium model depicting the health financing behavior of central and local finance authorities. Model 2 interprets the inevitable results in the wake of institutional changes in China's health care system:the shortage of health financing and the imbalance of its distribution. Through the analysis of strategic objective function and revenue function of these 2 parties, it has been proven that it is necessary for the local governments to provide the lion's share of health financing, and that the status quo of the central-local investment structure is thus formed by the gaming behavior of these interest groups.Part 4 focus on the analysis of the sectoral framework of Interest Groups in the setting of new health care reform. The conflicts of different sectors in grabbling government resources are analyzed to show the resource advantages and behavior strategy of each sector. Through expert consultancy, the list of the Interest Groups and their rank of importance are decided for concrete classification. Systematic analysis is made on the disposable resources of different sectors, micro-economic Interest Groups and their approaches and strategies in participating institutional changes. Adopting Mitchell Score-Based Approach, descriptive statistics and variation test are made on the three-dimensional data concerning the legitimacy, authority and urgency of the sifted Interest Groups. A Force Field Analysis is thus made for interest group in health care reform, in view of their interest demands.Part 5 makes game analysis on two essential issues in the ongoing health care reform: "subsidizing medical sector with drug sales", and Corporate Governance for public hospitals. First, through classical rent-seeking models in rent-seeking economics, theoretical interpretations are made on the source of rent in the rent-seeking gaming in the process of subsidizing medical sector with drug sales. Differentiated drug prices in public health institutions and retailing pharmacies are compared to demonstrate the loss of social benefit which underlies the rent-seeking gaming. Second, game analysis is made with respect to Corporate Governance for public hospitals, which is proven to be an effective reform strategy therewith.Part 6 undertakes normative analysis on the basis of the theoretical and empirical study above, and put forward policy recommendations to the systematic reform of health care in China.II. Research Method1. Literature Research:The major source of periodicals, thesis and yearbooks is academic journal webs, and that of investigation reports, policy information, statistical reports and data compilations is the websites of State Statistical Bureau and administration of public health department of different levels.2. Sampling Method:The population of the samples is the prices of medicine drugs of 12 public hospitals and 14 retail pharmacies. The varieties contain the top 100 drugs in nationwide sales ranking, and main factors include name, form, specification and price. The method for sampling is stratified random sampling based on 4 layers identified by the ranking of hospitals, and for every layer,20% samples are selected. The samples are comprised of 12 hospitals and 5 of which fall into the second-class (4 upper and 1 middle)and 7 are categorized as third-class(5 upper and 2 middle).3. Delphi technique method:Consult 30 experts on medical economics, hospital management, health system reform, economics and public management, to define and assort the interest group related to health and medicine, and based on which, analyze the gaming strategy and path selection and the affect on the reform of health and medicine on a systematic basis.4. Game Analysis:Simulation of the path, strategy selection and result of interest group based on the gaming model.Ⅲ. Results:1. System takes effect in the instruction of the interest allocating and transaction cost sharing among groups in transaction. There is 2-way evolutional relationship between the changes in health and medical system and the gaming of interest groups, and this article analyzed this relation in depth, adhering to the paradigm of "transaction cost-system selection-system change" of neoinstitutional economics. (1) Establish the model of intrinsic motivation of health and medical system changes, and raise the definition of "system probability curve". The change of government utility function framework is the key clue of system change. When rental utility decreases or wears out, the representative of nation-government will execute system change in the form of supply, and the utility will turn from rent preference to efficiency preference. The model explained the substantive changes in the rule of the health and medical system change:First, the changes in property right of public hospitals from state monopoly to diversified form, based on the premise of decentralization of power and transfer of profits; Second, the changes in financing system from government finance to diversified channels, and why the health and medical system transited from national finance to insurance system. (2) Explain the interest relation, strategy and result of the investment of national and local government. In the game of finance between national and local government, on one hand, the desire for investing in health and medicine is not strong mainly due to the expected low investment income; on the other hand, the local government will benefit more from the expenditure in health and medicine which resulted in more investment, in comparison with that of the national government. Consequently, the optimal choice of the local government is investing, regardless of the strategy of the national government, thus, the Nash Equilibrium is (not invest, invest).2. The second approach in this article is public choice route. (1) The conclusion that monopoly is the source of rent was made on the further analysis based on the monopoly model in economics. Medical service is necessity, and the monopoly profit is high due to the small flexibility. The empirical study analyzed the price variance between public hospitals and retail and concluded that the drug prices in public hospitals are higher than those of retail stores, which is the evidence of the fact that the source of false high price is public monopoly power in sales. Through the game analysis of rent seeking in drug price, the article concluded that the monopoly of hospitals in the sales of drugs is the result of administrative monopoly, and the direct economic supervision brings about the loss in social welfare and provides the probability and opportunity for system changes. On the other hand, The optimum probabilities of rent seeking and acceptance of rent seeking was calculated based on the game model of rent seeking, which causes the best extra profit. (2) The way out of the public hospital reform lies in how to determine definite boundary of the gaming parties in the system, which is the foundation for the realization of the equilibrium between public and administrative power. The analysis pointed out that the definition of property rights and contract is an effective way in dealing with the disorder of gaming in the field of health and medicine.3. Under the background of the reform of health and medical system, the power balance in interest parties is fairly low. How to prevent the affection of department interest on medical insurance is not only the key point of the balance of interest for each party, but an important breakthrough point of health care reform and system changes.Ⅳ.Innovation of the Research1. Research on changes of health and medical system through the unique perspective.The summary and generalization of the inherent law of the health and medical system were made through the view angle of institutional economics,and based on which, the common evolutionary process of system and interest group was discoverd.2. The combination of method of abstract analysis and concrete analysis, and the analysis of general equilibrium and partial equilibrium. Based on the equilibrium analysis, this artical analyzed the relation of the changes of health and medical institution and the interest groups behind in the abstract and general equilibrium way. The artical explained the general phenomenon in the changes of health and medical system by the structure of government utility model, and based on which, explained the gaming of medical expenditure of central and local government, and the control of monopoly profit of drug sales by the distributional coalitions.