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Price transparency in healthcare: Bargaining incentives and patient responses

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  • Feng, Yujie

Abstract

This paper studies the impact of price transparency on healthcare prices, using a natural experiment involving the gradual disclosure of medical procedure prices on a state-run website. The study finds that negotiated allowed amounts decreased by 5.1% for surgical procedures and 9.1% for radiology procedures, which have higher average allowed amounts and attracted more price requests on the website. In contrast, for lab procedures, the evidence is mixed and does not point to a clear effect. The observed reductions are primarily driven by provider–insurer negotiations rather than patient price shopping. Price reductions were consistent across all providers and insurers, regardless of whether their prices were listed on the transparency website, and extended to providers in neighboring states.

Suggested Citation

  • Feng, Yujie, 2025. "Price transparency in healthcare: Bargaining incentives and patient responses," Journal of Health Economics, Elsevier, vol. 102(C).
    • Handle: RePEc:eee:jhecon:v:102:y:2025:i:c:s0167629625000323
    DOI: 10.1016/j.jhealeco.2025.102998
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    More about this item

    Keywords

    Health care cost; Price transparency; Price dispersion;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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