TY  - JOUR
AU  - Dafny,Leemore
AU  - Dranove,David
TI  - Do Report Cards Tell Consumers Anything They Don't Already Know?  The Case of Medicare HMOs
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11420
PY  - 2005
Y2  - June 2005
UR  - http://www.nber.org/papers/w11420
L1  - http://www.nber.org/papers/w11420.pdf
N1  - Author contact info:
Leemore Dafny
Department of Management and Strategy
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL  60208-2001
Tel: 847/467-7511
Fax: 847/467-1777
E-Mail: l-dafny@kellogg.northwestern.edu

David Dranove
Management & Strategy Department
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL 60208-2001
E-Mail: d-dranove@kellogg.northwestern.edu
AB  - The use of government-mandated report cards to diminish uncertainty about the quality of products and services is widespread. However, report cards will have little effect if they simply confirm consumers' prior beliefs. Moreover, documented "responses" to report cards may reflect learning about quality that would have occurred in their absence ("market-based learning"). Using panel data on Medicare HMO market shares between 1994 and 2002, we examine the relationship between enrollment and quality before and after report cards were mailed to 40 million Medicare beneficiaries in 1999 and 2000. We find evidence that consumers learn from both public report cards and market-based sources, with the latter having a larger impact during our study period. Consumers are especially sensitive to both sources of information when the variance in HMO quality is greater. The effect of report cards is driven by beneficiaries' responses to consumer satisfaction scores; other reported quality measures such as the mammography rate did not affect enrollment decisions.
ER  -