Searching for Health: The Effects of Online Price Transparency

51 Pages Posted: 4 Nov 2015

Date Written: October 1, 2015

Abstract

Recent technologies provide consumers with access to price information for medical services, a market with uncharacteristic price dispersion and opaque prices. This paper examines the effects of an online price transparency platform on consumer behavior. I find that consumer use of price transparency information leads to a 16% reduction in prices for lab tests, 15% reduction for advanced imaging, and has an approximately 1% effect for physician office visits. Consistent with a search costs model, I find larger effects in markets with high price dispersion. However, for physician office visits, the value of non-price information exceeds the value of price information.

Keywords: Price transparency, health care prices, consumer search

JEL Classification: I12, D83, I11, L86

Suggested Citation

Whaley, Christopher, Searching for Health: The Effects of Online Price Transparency (October 1, 2015). Available at SSRN: https://ssrn.com/abstract=2684809 or http://dx.doi.org/10.2139/ssrn.2684809

Christopher Whaley (Contact Author)

RAND Corporation ( email )

1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
United States

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