Citation:
Ho K, Pakes A. Hospital Choices, Hospital Prices, and Financial Incentives to Physicians. American Economic Review. 2014;104 (12) :3841-3884.
Paper | 1 MB | |
Appendices | 188 KB |
Abstract:
We estimate an insurer-speci c 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-speci c hospital xed e¤ects (capturing hospital quality). We use an inequality estimator that allows for errors in price and detailed hospital-severity interactions and obtain markedly di¤erent 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-o¤ does not vary with capitation rates.