IDEAS home Printed from https://ideas.repec.org/a/aea/aejpol/v9y2017i2p28-56.html
   My bibliography  Save this article

Financial Incentives, Hospital Care, and Health Outcomes: Evidence from Fair Pricing Laws

Author

Listed:
  • Michael Batty
  • Benedic Ippolito

Abstract

State laws that limit how much hospitals are paid by uninsured patients provide a unique opportunity to study how financial incentives of health care providers affect the care they deliver. We estimate the laws reduce payments from uninsured patients by 25-30 percent. Even though the uninsured represent a small portion of their business, hospitals respond by decreasing the amount of care delivered to these patients, without measurable effects on a broad set of quality metrics. The results show that hospitals can, and do, target care based on financial considerations, and suggest that altering provider financial incentives can generate more efficient care.

Suggested Citation

  • Michael Batty & Benedic Ippolito, 2017. "Financial Incentives, Hospital Care, and Health Outcomes: Evidence from Fair Pricing Laws," American Economic Journal: Economic Policy, American Economic Association, vol. 9(2), pages 28-56, May.
  • Handle: RePEc:aea:aejpol:v:9:y:2017:i:2:p:28-56
    Note: DOI: 10.1257/pol.20160060
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/articles?id=10.1257/pol.20160060
    Download Restriction: no

    File URL: https://www.aeaweb.org/articles/attachments?retrieve=Ppgnz3k478dyQ575HC8xf0VjxAhEe52t
    Download Restriction: no

    File URL: https://www.aeaweb.org/articles/attachments?retrieve=HiheZhMvmSEn7w3D3CEsAOh7BVP4yKHQ
    Download Restriction: no

    File URL: https://www.aeaweb.org/articles/attachments?retrieve=sW3M667AAwaZcbr0uS4v9LSiLi5N0CDB
    Download Restriction: no

    References listed on IDEAS

    as
    1. Joseph J. Doyle, 2005. "Health Insurance, Treatment and Outcomes: Using Auto Accidents as Health Shocks," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 256-270, May.
    2. Silverman, Elaine & Skinner, Jonathan, 2004. "Medicare upcoding and hospital ownership," Journal of Health Economics, Elsevier, vol. 23(2), pages 369-389, March.
    3. David Card & Carlos Dobkin & Nicole Maestas, 2008. "The Impact of Nearly Universal Insurance Coverage on Health Care Utilization: Evidence from Medicare," American Economic Review, American Economic Association, vol. 98(5), pages 2242-2258, December.
    4. Yip, Winnie C., 1998. "Physician response to Medicare fee reductions: changes in the volume of coronary artery bypass graft (CABG) surgeries in the Medicare and private sectors," Journal of Health Economics, Elsevier, vol. 17(6), pages 675-699, December.
    5. Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-277, June.
    6. Amy Finkelstein & Sarah Taubman & Bill Wright & Mira Bernstein & Jonathan Gruber & Joseph P. Newhouse & Heidi Allen & Katherine Baicker, 2012. "The Oregon Health Insurance Experiment: Evidence from the First Year," The Quarterly Journal of Economics, Oxford University Press, vol. 127(3), pages 1057-1106.
    7. Jeffrey Clemens & Joshua D. Gottlieb & Tímea Laura Molnár, 2015. "The Anatomy of Physician Payments: Contracting Subject to Complexity," NBER Working Papers 21642, National Bureau of Economic Research, Inc.
    8. Joseph J. Doyle Jr., 2005. "Health Insurance, Treatment and Outcomes: Using Auto Accidents as Health Shocks," NBER Working Papers 11099, National Bureau of Economic Research, Inc.
    9. Randall P. Ellis & Thomas G. McGuire, 1993. "Supply-Side and Demand-Side Cost Sharing in Health Care," Journal of Economic Perspectives, American Economic Association, vol. 7(4), pages 135-151, Fall.
    10. Leemore S. Dafny, 2005. "How Do Hospitals Respond to Price Changes?," American Economic Review, American Economic Association, vol. 95(5), pages 1525-1547, December.
    11. Hodgkin, Dominic & McGuire, Thomas G., 1994. "Payment levels and hospital response to prospective payment," Journal of Health Economics, Elsevier, vol. 13(1), pages 1-29, March.
    12. Neale Mahoney, 2015. "Bankruptcy as Implicit Health Insurance," American Economic Review, American Economic Association, vol. 105(2), pages 710-746, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Sam Watson’s journal round-up for 12th June 2017
      by Sam Watson in The Academic Health Economists' Blog on 2017-06-12 16:00:00

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jeffrey Clemens & Benedic Ippolito, 2017. "Uncompensated Care and the Collapse of Hospital Payment Regulation: An Illustration of the Tinbergen Rule," NBER Working Papers 23758, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aejpol:v:9:y:2017:i:2:p:28-56. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael P. Albert). General contact details of provider: http://edirc.repec.org/data/aeaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.