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

Michael Batty | Zendy; Benedic Ippolito | Zendy

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

Author(s) -

Michael Batty,

Benedic Ippolito

Publication year - 2017

Publication title -

american economic journal economic policy

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 7.868

H-Index - 62

eISSN - 1945-7731

pISSN - 1945-774X

DOI - 10.1257/pol.20160060

Subject(s) - incentive , payment , health care , business , uncompensated care , finance , quality (philosophy) , affect (linguistics) , public economics , actuarial science , economics , medicaid , microeconomics , economic growth , philosophy , epistemology , linguistics

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. (JEL G22, H75, I11, I13, I18)

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