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Firm responses to targeted consumer incentives: Evidence from reference pricing for surgical services

Christopher M. Whaley and Timothy T. Brown

Journal of Health Economics, 2018, vol. 61, issue C, 111-133

Abstract: This paper examines how health care providers respond to a reference pricing insurance program that increases consumer cost sharing when consumers choose high-priced surgical providers. We use geographic variation in the population covered by the program to estimate supply-side responses. We find limited evidence of market segmentation and price reductions for providers with baseline prices above the reference price. Finally, approximately 75% of the reduction in provider prices is in the form of a positive externality that benefits a population not subject to the program.

Keywords: Reference pricing; Provider prices; Health care markets (search for similar items in EconPapers)
JEL-codes: I11 I13 L11 (search for similar items in EconPapers)
Date: 2018
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Journal of Health Economics is currently edited by J. P. Newhouse, A. J. Culyer, R. Frank, K. Claxton and T. McGuire

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