Regulating Out-of-Network Hospital Payments: Disagreement Payoffs, Negotiated Prices, and Access

Elena Prager and Nicholas Tilipman

No 33727, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Recent policy proposals seek to regulate out-of-network hospital prices. We study how such regulation affects equilibrium prices, network formation, and hospital exit. We estimate a structural model of insurer-hospital bargaining that allows for out-of-network transactions between non-contracting parties. These transactions generate a notion of exit by rendering hospitals unprofitable under some regulations. Estimation relies on a novel measure of out-of-network prices. We find that reducing out-of-network prices would also lower negotiated prices, but potentially at the cost of narrower hospital networks. Aggressive regulation could induce substantial hospital exit, but only under the restrictive assumption that negotiators cannot anticipate the exits.

JEL-codes: C78 I11 L13 (search for similar items in EconPapers)
Date: 2025-04
New Economics Papers: this item is included in nep-com, nep-gth, nep-hea, nep-net and nep-reg
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