First is the inability of physicians to close the market to competitors. This threat of potential competitors works to mitigate the market power of physicians. Second is the possibility that patients form a pdod expectations about the conditions for which they seek medical assistance. If the procedures suggested by physicians deviate significantly from these expectations, patients are likely to seek second opinions. Finally, there may be a limit to the umount of work that physicians want to create for themselves.
Defensive medicine is one of the primary causes of excessive health care spending.
Answer true or false and justify your answer. The U.S. legal system provides compensation to patients who can prove that they have been victims of medical matpractice, deviations from accepted medical standards of care that cause injury to the patient. In some instances, physicians may perform medical procedures in order to decrease the risk of a malpractice suit rather than because of the benefit that such a procedure provides a patient. Thus we may find the marginal cost of health services exceeding the marginal benefits. However, the existence of defensive medicine does not necessarily imply excessive health care spending.