Firm Responses to Targeted Consumer Incentives
Evidence from Reference Pricing for Surgical Services
Published in: Journal of Health Economics Volume 61 (September 2018), Pages 111-133. doi:10.1016/j.jhealeco.2018.06.012
Posted on RAND.org on October 17, 2018
Read MoreAccess further information on this document at Journal of Health Economics Volume 61 (September 2018)
This article was published outside of RAND. The full text of the article can be found at the link above.
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.