American Economic Review Vol. 104 No. 12 2014
Hospital Choices, Hospital Prices, and Financial Incentives to Physicians
Abstract
We estimate an insurer-specific preference function which rationalizes hospital referrals for privately insured births in California. The function is additively separable in: a hospital price paid by the insurer, the distance traveled, and plan- and severity-specific hospital fixed effects (capturing hospital quality). We use an inequality estimator that allows for errors in price and detailed hospital-severity interactions and obtain markedly different results than those from a logit. The estimates indicate that insurers with more capitated physicians are more responsive to price. Capitated plans send patients further to utilize similar quality, lower-priced hospitals; but the cost-quality trade-off does not vary with capitation rates.
- DOI
- 10.1257/aer.104.12.3841
- Volume
- 104
- Issue
- 12
- Pages
- 3841-3884
- Language
- en
- Sources
- openalex bibtex:phds-export.bib crossref