TY  - JOUR
AU  - Chernew,Michael
AU  - Gowrisankaran,Gautam
AU  - Scanlon,Dennis P.
TI  - Learning and the Value of Information: Evidence From Health Plan Report Cards
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8589
PY  - 2001
Y2  - November 2001
UR  - http://www.nber.org/papers/w8589
L1  - http://www.nber.org/papers/w8589.pdf
N1  - Author contact info:
Michael Chernew
Harvard Medical School
Dept. of Health Care Policy
180 Longwood Avenue
Boston, MA  02115
Tel: 617/432-0174
Fax: 617/432-2648
E-Mail: chernew@hcp.med.harvard.edu

Gautam Gowrisankaran
Professor of Economics
Department of Economics
University of Arizona
P.O. Box 210108
Tucson, AZ 85721-0108
Tel: 520/621-2529
Fax: 520/621-8450
E-Mail: gowrisankaran@eller.arizona.edu
AB  - We estimate a Bayesian learning model in order to assess the value of health plan performance information and the extent to which the explicit provision of information about product quality alters consumer behavior. We take advantage of a natural experiment in which health plan performance information for HMOs was released to employees of a Fortune 50 company for the first time. Our empirical work indicates that the release of information had a small but statistically significant effect on health plan choices, causing 3.1% of employees to switch health plans. Although consumers were willing to pay an extra $267 per year per below average rating avoided, the average value of the information per employee was only $10 per year. The relatively small impact of the ratings arises because the ratings were estimated to be very imprecise measures of quality. More precise measures of quality could have been more valuable.
ER  -