Free to Choose? Reform, Choice and Consideration Sets in the English National Health Service

Free to Choose? Reform, Choice and Consideration Sets in the English National Health Service

By
Stephan Seiler, Martin Gaynor, Carol Propper
American Economic Review. November
2016, Vol. 106, Issue 11, Pages 3251-3257

Choice in public services is controversial. We exploit a reform in the English National Health Service to assess the effect of removing constraints on patient choice. We estimate a demand model that explicitly captures the removal of the choice constraints imposed on patients. We find that, post-removal, patients became more responsive to clinical quality. This led to a modest reduction in mortality and a substantial increase in patient welfare. The elasticity of demand faced by hospitals increased substantially post-reform and we find evidence that hospitals responded to the enhanced incentives by improving quality. This suggests greater choice can raise quality.