Abstract:
:Both Medicare and Medicaid are reducing payments to hospitals, and there is widespread concern that hospitals may respond by increasing prices to privately insured patients. Theoretical models of hospital behaviour have ambiguous predictions as to whether, and under what circumstances, hospitals will shift costs to private payers. This paper extends previous theoretical models and then tests empirically using data from California for the 1983-1991 period, a time of increasingly intense price competition. Hospitals did increase their prices to private payers in response to reductions in Medicare rates; they had far smaller and generally insignificant responses to changes in Medicaid reimbursement. Hospital ownership and the competitiveness of the hospital market both affected this behaviour, but there was no significant change over time. The results suggest the need to broaden our models of hospital behaviour to 'embed' them in their local markets.
journal_name
Health Econjournal_title
Health economicsauthors
Zwanziger J,Melnick GA,Bamezai Adoi
10.1002/(sici)1099-1050(200004)9:3<211::aid-hec508keywords:
subject
Has Abstractpub_date
2000-04-01 00:00:00pages
211-26issue
3eissn
1057-9230issn
1099-1050pii
10.1002/(SICI)1099-1050(200004)9:3<211::AID-HEC508journal_volume
9pub_type
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