Measuring Consumer Valuation of Limited Provider Networks

Keith Ericson and Amanda Starc

No 20812, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We measure provider coverage networks for plans on the Massachusetts health insurance exchange using a two measures: consumer surplus from a hospital demand system and the fraction of population hospital admissions that would be covered by the network. The two measures are highly correlated, and show a wide range of networks available to consumers. We then estimate consumer willingness-to-pay for network breadth, which varies by age. 60-year-olds value the broadest network approximately $1200-1400/year more than the narrowest network, while 30-year-olds value it about half as much. Consumers place additional value on star hospitals, and there is significant geographic heterogeneity in the value of network breadth.

JEL-codes: I10 I11 I13 L14 (search for similar items in EconPapers)
Date: 2014-12
New Economics Papers: this item is included in nep-com, nep-ias and nep-mkt
Note: AG EH IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published as Keith Marzilli Ericson & Amanda Starc, 2015. "Measuring Consumer Valuation of Limited Provider Networks," American Economic Review, American Economic Association, vol. 105(5), pages 115-19, May.

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