Physician pricing behavior: Evidence from an Australian experiment

Publication Type:
Journal Article
Journal of Economic Behavior and Organization, 2019, 161 pp. 20 - 34
Issue Date:
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© 2019 Elsevier B.V. We examine the unregulated pricing behavior of physicians in response to an exogenous decrease in patient entitlements under a government scheme providing insurance for high out-of-pocket medical costs. We use survey-linked administrative data to estimate the causal effects of the policy change on consultation fees. Adopting a quasi-experimental difference-in-difference model, we find that in response, physicians with knowledge of the patient's eligibility raised consultation fees by an average 12%. The results show significant unintended consequences of the policy change, indicating that a physician's knowledge of patient eligibility for healthcare benefits may allow them to affect demand for their services.
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