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  3. American Economic Journal: Economic Policy
  4. May 2017
  5. Financial Incentives, Hospital Care, and Health Outcomes: Evidence from Fair Pricing Laws

Financial Incentives, Hospital Care, and Health Outcomes: Evidence from Fair Pricing Laws

  • Michael Batty
  • Benedic Ippolito
American Economic Journal: Economic Policy
vol. 9, no. 2, May 2017
(pp. 28-56)
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Abstract

State laws that limit how much hospitals are paid by uninsured patients provide a unique opportunity to study how financial incentives of health care providers affect the care they deliver. We estimate the laws reduce payments from uninsured patients by 25-30 percent. Even though the uninsured represent a small portion of their business, hospitals respond by decreasing the amount of care delivered to these patients, without measurable effects on a broad set of quality metrics. The results show that hospitals can, and do, target care based on financial considerations, and suggest that altering provider financial incentives can generate more efficient care.

Citation

Batty, Michael, and Benedic Ippolito. 2017. "Financial Incentives, Hospital Care, and Health Outcomes: Evidence from Fair Pricing Laws." American Economic Journal: Economic Policy, 9 (2): 28-56. DOI: 10.1257/pol.20160060

Additional Materials

JEL Classification

  • G22 Insurance; Insurance Companies; Actuarial Studies
  • H75 State and Local Government: Health; Education; Welfare; Public Pensions
  • I11 Analysis of Health Care Markets
  • I13 Health Insurance, Public and Private
  • I18 Health: Government Policy; Regulation; Public Health
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