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The welfare loss from hospital cost‐shifting behavior: a partial equilibrium analysis

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  • Rexford E. Santerre

Abstract

Cost shifting occurs when changes in administered prices of one payer lead to compensating changes in prices charged to other payers. Microeconomic theory suggests that cost shifting can take place under limited conditions and some empirical studies indicate that that hospital cost shifting may have actually occurred at various times. This study designs a model to conceptualize and quantify the potential welfare loss caused by hospital cost shifting under idealized yet fairly plausible conditions. The resulting estimate yields only a small efficiency loss of at most, 0.84% of private hospital expenditures in the US for 1992. Copyright © 2004 John Wiley & Sons, Ltd.

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  • Rexford E. Santerre, 2005. "The welfare loss from hospital cost‐shifting behavior: a partial equilibrium analysis," Health Economics, John Wiley & Sons, Ltd., vol. 14(6), pages 621-626, June.
    • Handle: RePEc:wly:hlthec:v:14:y:2005:i:6:p:621-626
    DOI: 10.1002/hec.961
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    References listed on IDEAS

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    1. Grabowski, David C. & Hirth, Richard A., 2003. "Competitive spillovers across non-profit and for-profit nursing homes," Journal of Health Economics, Elsevier, vol. 22(1), pages 1-22, January.
    2. Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-277, June.
    3. Jack Zwanziger & Glenn A. Melnick & Anil Bamezai, 2000. "Can cost shifting continue in a price competitive environment?," Health Economics, John Wiley & Sons, Ltd., vol. 9(3), pages 211-226, April.
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    Cited by:

    1. Hart Hodges & Steven Henson, 2009. "Medical Reimbursements and Patient Selection by Physicians: A Capital-Theoretic Approach," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 37(4), pages 397-408, December.

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