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Physician pricing behavior: Evidence from an Australian experiment

Author

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  • Yu, Serena
  • van Gool, Kees
  • Hall, Jane
  • Fiebig, Denzil G.

Abstract

We examine the unregulated pricing behavior of physicians in response to an exogenous decrease in patient entitlements under a government scheme providing insurance for high out-of-pocket medical costs. We use survey-linked administrative data to estimate the causal effects of the policy change on consultation fees. Adopting a quasi-experimental difference-in-difference model, we find that in response, physicians with knowledge of the patient's eligibility raised consultation fees by an average 12%. The results show significant unintended consequences of the policy change, indicating that a physician's knowledge of patient eligibility for healthcare benefits may allow them to affect demand for their services.

Suggested Citation

  • Yu, Serena & van Gool, Kees & Hall, Jane & Fiebig, Denzil G., 2019. "Physician pricing behavior: Evidence from an Australian experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 161(C), pages 20-34.
  • Handle: RePEc:eee:jeborg:v:161:y:2019:i:c:p:20-34
    DOI: 10.1016/j.jebo.2019.03.008
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    References listed on IDEAS

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    1. Aviva Aron-Dine & Liran Einav & Amy Finkelstein & Mark Cullen, 2015. "Moral Hazard in Health Insurance: Do Dynamic Incentives Matter?," The Review of Economics and Statistics, MIT Press, vol. 97(4), pages 725-741, October.
    2. Gaynor, Martin & Vogt, William B., 2000. "Antitrust and competition in health care markets," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 27, pages 1405-1487 Elsevier.
    3. 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.
    4. Cooper, Zack & Craig, Stuart & Gaynor, Martin & Van Reenen, John, 2015. "The price ain’t right? hospital prices and healthspending on the privately insured," LSE Research Online Documents on Economics 66059, London School of Economics and Political Science, LSE Library.
    5. Kees Van Gool & Elizabeth Savage & Rosalie Viney & Marion Haas & Rob Anderson, 2009. "Who's Getting Caught? An Analysis of the Australian Medicare Safety Net," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(2), pages 143-154, June.
    6. Hahn, Youjin, 2013. "The effect of Medicaid physician fees on take-up of public health insurance among children in poverty," Journal of Health Economics, Elsevier, vol. 32(2), pages 452-462.
    7. Toshiaki Iizuka, 2012. "Physician Agency and Adoption of Generic Pharmaceuticals," American Economic Review, American Economic Association, vol. 102(6), pages 2826-2858, October.
    8. Zweifel, Peter & Manning, Willard G., 2000. "Moral hazard and consumer incentives in health care," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 8, pages 409-459 Elsevier.
    9. Meliyanni Johar & Glenn Jones & Elizabeth Savage, 2012. "Healthcare Expenditure Profile of Older Australians: Evidence from Linked Survey and Health Administrative Data," Economic Papers, The Economic Society of Australia, vol. 31(4), pages 451-463, December.
    10. David Dranove & Mark A. Satterthwaite, 1992. "Monopolistic Competition When Price and Quality are Imperfectly Observable," RAND Journal of Economics, The RAND Corporation, vol. 23(4), pages 518-534, Winter.
    11. Lundin, Douglas, 2000. "Moral hazard in physician prescription behavior," Journal of Health Economics, Elsevier, vol. 19(5), pages 639-662, September.
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    More about this item

    Keywords

    Health providers; Policy evaluation; Health insurance; Applied microeconomics;

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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