Working Paper

I've Got 99 Problems But a Bill Ain't One: Hospital Billing Caps and Financial Distress in California

Abstract: We examine the financial consequences of the 2007 California Fair Pricing Law (FPL), a law that places a price ceiling on hospital bills for uninsured and financially vulnerable individuals. Using difference-in difference-in-differences models, we exploit cross-sectional variation in exposure to the law to estimate the causal effects of the FPL on different measures of financial distress. We find that the law reduces the medical and non-medical debt burden of individuals targeted by the law, with the likelihood of incurring non-medical debt in collections declining by 14.5 percent and the number of non-medical collections declining by 31 percent. The law also reduces the probability of having medical and non-medical debt balances between $1 and $1,000 in collections by 16.5 percent and 40 percent, respectively. Our results suggest that hospital billing regulations have direct and indirect effects on the personal financial outcomes of uninsured and financially vulnerable individuals.

Keywords: inancial distress; consumer credit; hospitals; health care;

JEL Classification: G51; I18; H75;

https://doi.org/10.21799/frbp.wp.2023.20

Bibliographic Information

Provider: Federal Reserve Bank of Philadelphia

Part of Series: Working Papers

Publication Date: 2023-09-19

Number: 23-20