Recent policy proposals seek to regulate out-of-network hospital prices. We study how such regulation affects equilibrium prices, network formation, and hospital exit. We estimate a structural model of insurer-hospital bargaining that allows for out-of-network transactions between non-contracting parties. These transactions generate a notion of exit by rendering hospitals unprofitable under some regulations. Estimation relies on a novel measure of out-of-network prices. We find that reducing out-of-network prices would also lower negotiated prices, but potentially at the cost of narrower hospital networks. Aggressive regulation could induce substantial hospital exit, but only under the restrictive assumption that negotiators cannot anticipate the exits.

Please note: Registration for this event is required. In-person attendance is strongly encouraged, although virtual access will be provided for all registrants.

Co-sponsored with the Department of Health Care Management at the Wharton School.

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Speaker

Elena Prager, PhD, is an applied microeconomist who studies the industrial organization of health care markets and labor markets. On the health care side, she works on insurance design and prices. On the labor side, she studies the effects of employer market power on workers. She is currently an Assistant Professor of Economics at the University of Rochester’s Simon Business School. Prior to joining the Simon School, Prager was at Northwestern University’s Kellogg School of Management. She earned her PhD from the Wharton School’s Health Care Management Department.