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Equilibrium Effects of Health Care Price Information

Author

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  • Zach Y. Brown

    (University of Michigan and National Bureau of Economic Research)

Abstract

Do information frictions in health care markets lead to higher prices and price dispersion? Focusing on medical imaging procedures, this paper examines the equilibrium effect of a unique statewide price transparency website. Price information leads to a shift to lower-cost providers, especially for patients subject to a deductible. Furthermore, supply-side effects play a significant role in the long run, benefiting all insured individuals. Supply-side effects reduce price dispersion and are especially relevant in concentrated markets. These effects are important given that high prices are thought to be a primary cause of high private health care spending.

Suggested Citation

  • Zach Y. Brown, 2019. "Equilibrium Effects of Health Care Price Information," The Review of Economics and Statistics, MIT Press, vol. 101(4), pages 699-712, October.
    • Handle: RePEc:tpr:restat:v:101:y:2019:i:4:p:699-712
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    References listed on IDEAS

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    Cited by:

    1. Martin Gaynor & Kate Ho & Robert J. Town, 2015. "The Industrial Organization of Health-Care Markets," Journal of Economic Literature, American Economic Association, vol. 53(2), pages 235-284, June.
    2. Lee, Chung-Ying, 2020. "Pricing strategy and moral hazard: Copay coupons in pharmaceuticals," International Journal of Industrial Organization, Elsevier, vol. 70(C).
    3. Christopher T. Robertson & Wendy Netter Epstein & Hansoo Ko, 2023. "The effects of price transparency and debt collection policies on intentions to consume recommended health care: A randomized vignette experiment," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 20(4), pages 941-960, December.
    4. Ralph Siebert & Michael J. Seiler, 2020. "Why Do Buyers Pay Different Prices for Comparable Products? Evidence from the Housing Market," CESifo Working Paper Series 8337, CESifo.
    5. Xuan Teng, 2022. "Self-Preferencing, Quality Provision, and Welfare in Mobile Application Markets," CESifo Working Paper Series 10042, CESifo.
    6. Chernew, Michael & Cooper, Zack & Hallock, Eugene Larsen & Scott Morton, Fiona, 2021. "Physician agency, consumerism, and the consumption of lower-limb MRI scans," Journal of Health Economics, Elsevier, vol. 76(C).
    7. Klein, Tobias & Husiatyński, Maciej & Mikkers, Misja, 2021. "Increasing price transparency in the Dutch health care market does not affect provider choice," CEPR Discussion Papers 15981, C.E.P.R. Discussion Papers.
    8. Johannes Abeler & David Huffman & Collin Raymond & David B. Huffman, 2023. "Incentive Complexity, Bounded Rationality and Effort Provision," CESifo Working Paper Series 10541, CESifo.
    9. Ralph B. Siebert & Michael J. Seiler, 2022. "Why Do Buyers Pay Different Prices for Comparable Products? A Structural Approach on the Housing Market," The Journal of Real Estate Finance and Economics, Springer, vol. 65(2), pages 261-292, August.
    10. Abeler, Johannes & Huffman, David B. & Raymond, Collin, 2023. "Incentive Complexity, Bounded Rationality and Effort Provision," IZA Discussion Papers 16284, Institute of Labor Economics (IZA).

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