Public Reporting and Consumer Demand in the Home Health Sector

Abstract

Health care report cards improve information and are a crucial part of health care reform of the federal government of the United States. I exploit a natural experiment in the home health sector to assess whether a higher rating under the star ratings program affects patient choice. Higher rated agencies increased their market share by 1.4% or 0.25 (95% confidence interval: [-0.63, 1.12]) percentage points, a practically and statistically insignificant amount. I find no evidence of heterogeneous effects across the rating distribution or over time. I also find precise null effects among consumers expected to be more responsive, including community-entry patients and patients in competitive markets with more options and star types. Agencies may have modestly impeded consumer choice by engaging in some patient selection behaviors, although the evidence is only weakly suggestive. The star ratings are unlikely to improve home health quality despite continued policymaker interest.

Keywords: Medicare; health care reform; health insurance; home health; information asymmetry; long-term care; post-acute care; quality; report cards.