Class Year

2015

Residential College

Timothy Dwight College

Department

Ethics, Politics, and Economics

Advisor

Zack Cooper

Abstract

This thesis shows the limitations of price and quality information for improving the value of healthcare delivery in the United States. First, in four survey experiments to determine the impact of information on decision-making, consumers were more likely to choose the lower cost or higher quality option when relevant information was presented in straightforward ways with a minimized risk of information overload (n = 224, t = -3.7065, p = 0.0002). Second, hospitals on the U.S. News Best Hospital list between 2008 and 2011 were shown to be significantly more likely to be found in wealthy, highly populated areas, while unranked hospitals were more likely to be the sole community provider. Third, perceived quality (U.S. News-ranked hospitals) was shown to be out of alignment with actual quality (hospitals performing above the national average for readmission and mortality according to Medicare Hospital Compare): 36 hospitals performed well on both lists, constituting only 0.77% of total hospitals in the U.S. in 2011.

Current efforts have not gone far enough toward complete transparency to lead to negative effects such as collusion, nor to positive effects such as better value. Fears held by economists and private sector participants will likely not be realized in the near future—but neither will the hopes of policymakers for demand-driven change in the healthcare system.

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