Measuring Consumer Valuation of Limited Provider Networks
- (pp. 115-19)
Abstract
We measure the breadth of insurance networks in the Massachusetts health insurance exchange. Using our measures, we estimate consumer willingness-to-pay for broad and narrow networks. We find that consumers have a wide range of plans available with dramatically different networks. While consumers value broader networks, their willingness-to-pay is smaller than the brand premium, indicating an additional role for brand preferences. Consumers place additional value on star hospitals, which may affect upstream negotiations. Finally, we find significant geographic heterogeneity in the value of broad networks.Citation
Ericson, Keith Marzilli, and Amanda Starc. 2015. "Measuring Consumer Valuation of Limited Provider Networks." American Economic Review, 105 (5): 115-19. DOI: 10.1257/aer.p20151082Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- G22 Insurance; Insurance Companies; Actuarial Studies
- H51 National Government Expenditures and Health
- H75 State and Local Government: Health; Education; Welfare; Public Pensions
- I13 Health Insurance, Public and Private