TY  - JOUR
AU  - Ho,Katherine
TI  - The Welfare Effects of Restricted Hospital Choice in the US Medical Care Market
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11819
PY  - 2005
Y2  - December 2005
UR  - http://www.nber.org/papers/w11819
L1  - http://www.nber.org/papers/w11819.pdf
N1  - Author contact info:
Kate Ho
Columbia University
Department of Economics
1037 International Affairs Building
420 West 118th Street
New York, NY 10027
Tel: 212/854-7605
Fax: 212/854-8059
E-Mail: kh2214@columbia.edu
AB  - Managed care health insurers in the US restrict their enrollees' choice of hospitals to within specific networks. This paper considers the implications of these restrictions. A three-step econometric model is used to predict consumer preferences over health plans conditional on the hospitals they offer. The results indicate that consumers place a positive and significant weight on their expected utility from the hospital network when choosing plans. A welfare analysis, assuming fixed prices, implies that restricting consumers' choice of hospitals leads to a loss to society of approximately $1 billion per year across the 43 US markets considered. This figure may be outweighed by the price reductions generated by the restriction.
ER  -