2022/9/12 Do Patients Benefit from Price Transparency in Healthcare? Evidence from Medical Implants in Taiwan

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2022/9/12 Do Patients Benefit from Price Transparency in Healthcare? Evidence from Medical Implants in Taiwan

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Healthcare reformers sometimes call for greater price transparency, for example requiring that hospitals post prices on the Internet or that drug companies post prices in advertisements. In Taiwan in 2014, the government mandated greater transparency for hospital prices for medical implants. Hospitals were required to publish and continuously update actual transaction prices on a price comparison website. I estimate the effect of this transparency mandate on prices using variation across products and providers before and after the policy change. I find that the price transparency policy reduced prices in markets with easy access to the price comparison website and raised prices in markets where access to the website is costly. The magnitude of price changes is larger for products mostly used in a non-emergency setting and for markets with sufficient competition. These findings suggest policymakers should consider search costs, product characteristics, and market structure when promoting price transparency.