Premium
The welfare loss from hospital cost‐shifting behavior: a partial equilibrium analysis
Author(s) -
Santerre Rexford E.
Publication year - 2005
Publication title -
health economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.55
H-Index - 109
eISSN - 1099-1050
pISSN - 1057-9230
DOI - 10.1002/hec.961
Subject(s) - partial equilibrium , welfare , economics , deadweight loss , general equilibrium theory , microeconomics , market economy
Cost shifting occurs when changes in administered prices of one payer lead to compensating changes in prices charged to other payers. Microeconomic theory suggests that cost shifting can take place under limited conditions and some empirical studies indicate that that hospital cost shifting may have actually occurred at various times. This study designs a model to conceptualize and quantify the potential welfare loss caused by hospital cost shifting under idealized yet fairly plausible conditions. The resulting estimate yields only a small efficiency loss of at most, 0.84% of private hospital expenditures in the US for 1992. Copyright © 2004 John Wiley & Sons, Ltd.