Medicare balance billing restrictions: Impacts on physicians and beneficiaries

Beginning in the late 1980s, states and the federal government restricted the ability of physicians to “balance bill” Medicare beneficiaries for charges in excess of the copayment and reimbursement amounts approved by Medicare. In this paper, I provide empirical evidence that this policy change resulted in a 9% reduction in out-of-pocket medical expenditures by elderly households. In spite of the change in marginal reimbursement to physicians, however, I find little evidence that the restrictions affected patterns of care. Thus, this restriction on the prices charged by physicians amounted to a transfer from affected physicians to affected patients.