The welfare loss from hospital cost-shifting behavior: a partial equilibrium analysis
Article first published online: 20 OCT 2004
Copyright © 2004 John Wiley & Sons, Ltd.
Volume 14, Issue 6, pages 621–626, June 2005
How to Cite
Santerre, R. E. (2005), The welfare loss from hospital cost-shifting behavior: a partial equilibrium analysis. Health Econ., 14: 621–626. doi: 10.1002/hec.961
- Issue published online: 9 MAY 2005
- Article first published online: 20 OCT 2004
- Manuscript Accepted: 9 JUL 2004
- Manuscript Received: 16 DEC 2003
- cost shifting;
- welfare loss
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.