63 Pages Posted: 22 Oct 2013 Last revised: 11 Apr 2017
Date Written: April 10, 2017
Using micro data on actual healthcare purchases, we provide evidence on the causal effects of charge-price transparency regulation (PTR). We find that, although PTR causes providers to reduce charges by approximately 6%, these reductions do not lead to lower actual payments. Variation in the estimated treatment effect across hospitals suggests that reputational costs of perceived overcharging, rather than increased consumer search, explain the observed reduction in charges. Taken together, our results indicate that providers can avoid the potential impact of PTR on profitability by altering charges without affecting payments, which suggests that price transparency regulation based only on charges could be a way for policy makers to give the appearance they are addressing rising healthcare costs without imposing significant costs on providers.
Keywords: Price Transparency Regulation; Pricing Policies; Nonprofit Accounting, Decoupling
JEL Classification: A10, I11, K32, L15
Suggested Citation: 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 10, 2017). Chicago Booth Research Paper No. 14-33. Available at SSRN: https://ssrn.com/abstract=2343367 or http://dx.doi.org/10.2139/ssrn.2343367
By Ray Ball