Abstract

http://ssrn.com/abstract=2343367
 


 



The Effects of Charge-Price Transparency Regulation on Prices in the Healthcare Industry


Hans Bonde Christensen


University of Chicago - Booth School of Business

Eric Floyd


Rice University

Mark G. Maffett


University of Chicago - Booth School of Business

April 30, 2016

Chicago Booth Research Paper No. 14-33

Abstract:     
Using micro data on actual healthcare purchases, we provide evidence on the causal effects of charge-price transparency regulation (PTR). We find that PTR causes providers to reduce charges by approximately 6%. However, despite the strong cross-hospital correlation between charge and actual prices, these reductions do not lead to lower actual payments. Cross-sectional variation in the estimated treatment effect suggests that the reputational costs of perceived overcharging rather than increased consumer search explain the reduction in charges. Our results show that reputational concerns affect hospitals’ charge setting strategies and illustrate how the healthcare industry’s complex, heterogeneous pricing structure makes it difficult to increase consumer welfare by increasing transparency.

Number of Pages in PDF File: 59

Keywords: Price Transparency Regulation; Pricing Policies; Nonprofit Accounting

JEL Classification: A10, I11, K32, L15


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Date posted: October 22, 2013 ; Last revised: May 6, 2016

Suggested Citation

Christensen, Hans Bonde and Floyd, Eric and Maffett, Mark G., The Effects of Charge-Price Transparency Regulation on Prices in the Healthcare Industry (April 30, 2016). Chicago Booth Research Paper No. 14-33. Available at SSRN: http://ssrn.com/abstract=2343367 or http://dx.doi.org/10.2139/ssrn.2343367

Contact Information

Hans Bonde Christensen
University of Chicago - Booth School of Business ( email )
5807 South Woodlawn Avenue
Chicago, IL 60637
United States

Chicago Booth School of Business Logo

Eric Floyd
Rice University ( email )
6100 South Main Street
Houston, TX 77005-1892
United States
Mark G. Maffett (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Chicago Booth School of Business Logo

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