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The Effects of Provider Choice Policies on Workers' Compensation Costs


  • David Neumark
  • Bogdan Savych


We examine the effects of provider choice policies on workers’ compensation medical and indemnity costs. We find no difference in average medical costs between states where policies give employers control over the choice of provider and states where policies instead give workers the most control. But a richer distributional analysis indicates that developed medical costs for the costliest cases are higher in states where policies give workers more control over provider choice. We find similar evidence for indemnity costs, although the point estimates also indicate (statistically insignificantly) higher average costs where policy gives workers the most control over provider choice. Overall, the evidence suggests little relationship between provider choice policies and average medical or indemnity costs, but a higher incidence of high-cost cases when policies give workers more control of the choice of provider.

Suggested Citation

  • David Neumark & Bogdan Savych, 2017. "The Effects of Provider Choice Policies on Workers' Compensation Costs," NBER Working Papers 23611, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23611
    Note: HC HE LS

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    References listed on IDEAS

    1. David Neumark & Peter S. Barth & Richard A. Victor, 2007. "The Impact of Provider Choice on Workers' Compensation Costs and Outcomes," ILR Review, Cornell University, ILR School, vol. 61(1), pages 121-142, October.
    2. Parente Paulo M.D.C. & Santos Silva João M.C., 2016. "Quantile Regression with Clustered Data," Journal of Econometric Methods, De Gruyter, vol. 5(1), pages 1-15, January.
    3. J.A.F. Machado & P.M.D.C Parente & J.M.C. Santos Silva, 2011. "QREG2: Stata module to perform quantile regression with robust and clustered standard errors," Statistical Software Components S457369, Boston College Department of Economics, revised 16 Jun 2017.
    4. Silvana Pozzebon, 1994. "Medical Cost Containment under Workers' Compensation," ILR Review, Cornell University, ILR School, vol. 48(1), pages 153-167, October.
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    More about this item

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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