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Do report cards tell consumers anything they don't already know? The case of Medicare HMOs

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  • Leemore Dafny
  • David Dranove

Abstract

Estimated responses to report cards may reflect learning about quality that would have occurred in their absence (“market‐based learning”). Using panel data on Medicare HMOs, we examine the relationship between enrollment and quality before and after report cards were mailed to 40 million Medicare beneficiaries in 1999 and 2000. We find consumers learn from both public report cards and market‐based sources, with the latter having a larger impact. Consumers are especially sensitive to both sources of information when the variance in HMO quality is greater. The effect of report cards is driven by beneficiaries' responses to consumer satisfaction scores.

Suggested Citation

  • Leemore Dafny & David Dranove, 2008. "Do report cards tell consumers anything they don't already know? The case of Medicare HMOs," RAND Journal of Economics, RAND Corporation, vol. 39(3), pages 790-821, September.
  • Handle: RePEc:bla:randje:v:39:y:2008:i:3:p:790-821
    DOI: 10.1111/j.1756-2171.2008.00039.x
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    More about this item

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • H4 - Public Economics - - Publicly Provided Goods
    • I1 - Health, Education, and Welfare - - Health

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