This paper shows that consumers respond to prices for complex healthcare when they can easily assess out-of-pocket prices. Healthcare cost containment efforts increasingly incentivize price shopping despite a dearth of evidence that this steers consumers toward lower-priced care for major medical services. I show that consumers shift toward lower-priced hospitals in the highly simplified price information environment of insurance plans with tiered hospital networks. Consumers observe a single predictable, well-defined price that applies to a broad range of services within each of at most three hospital tiers. Within three years, expected partial-equilibrium savings reach 8–17 percent of baseline spending.
"Healthcare Demand under Simple Prices: Evidence from Tiered Hospital Networks."
American Economic Journal: Applied Economics,
Insurance; Insurance Companies; Actuarial Studies
State and Local Government: Health; Education; Welfare; Public Pensions
Analysis of Health Care Markets
Health Insurance, Public and Private