Provider Behavior Under Global Budgeting: Does it evolve from Dysfunctional Tragedy of the Commons to cooperative Nash Equilibrium?

Background: Taiwan's National Health Insurance implemented phased global budgeting by 2002, imposing nation-wide expenditure caps on each care sector. This study examines whether ophthalmologists responded to global budgeting by expanding high-value care volumes to capture revenue share (Tragedy of the Commons), followed by a cooperative Nash Equilibrium, when faced with decreasing total revenue despite increasing care volumes. Methods: Secondary ophthalmic claims care data for 2000 and 2001 (pre-GB for clinic and hospital sector respectively), 2005 (post GB), 2007 (long term response post GB) were used. Clinics submit Simplified Claim Forms (routine office visit, fixed low price) and Special Case Claims (complex clinical conditions with variable inputs) . Hospitals submit case payment (CP) claims for cataract surgery (fixed, though attractive reimbursement rate) and non-case payment claims (NCP, for cases with variable care inputs). The Tragedy of the Commons phenomenon should cause clinics to expand high value services (SCC) at the expense of low value services (SCF) and cause hospitals to increase NCP volume, because of NHI rationing of CP volumes. Results: Among clinics, SCC care increased concomitant with reduced SCF post GB, followed by stabilization in the long-term post GB phase. A moderating effect of market competition level (Herfindal-Hirschman Index) is observed. Among hospitals, CP claims reduced and stabilized but NCP claims increased steadily through the entire study period, supporting the Tragedy of the Commons hypothesis but not attainment of the Nash equilibrium. Conclusion: Global budgets may control supplier-induced demand in the long run if adequate professional self-regulatory mechanisms are facilitated.