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The Secret Menu in Health Care: A Market for Imaging in California

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Wang,  Lucy Xiaolu
MPI for Innovation and Competition, Max Planck Society;

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Citation

Epstein, J., Nicholson, S., Wang, L. X., Hempstead, K., & Asin, S. (2021). The Secret Menu in Health Care: A Market for Imaging in California. Max Planck Institute for Innovation & Competition Research Paper, No. 21-05.


Cite as: http://hdl.handle.net/21.11116/0000-0007-AC1E-7
Abstract
In addition to the prices they negotiate with private health insurers, most providers also have a cash price schedule for patients who have the wherewithal to ask and are willing to pay in full when they receive a service. This is the first study that estimates the potential cost saving of allowing privately-insured consumers to observe both in-network negotiated prices and cash prices, which is of particular interest given the growing importance of high-deductible health plans and a recent executive order mandating greater price transparency. Using data from five private health insurers and 142 imaging facilities in the San Francisco Bay Area, we estimate that patients could save between 10 percent and 22 percent of their insurer’s in-network price by paying cash. Potential savings are much larger (between 45 percent and 64 percent of their insurer’s in-network price) if consumers observe both cash and in-network prices and select the facility in the region offering the lowest price for a particular service.