Hospital Billing Regulations and Financial Well-being: Evidence from California's Fair Pricing Law

We examine the financial consequences of the 2007 California Fair Pricing Law, which places a price ceiling on hospital bills for financially vulnerable individuals. Using cross-sectional variation in exposure to the law, proxied by county-level uninsured rates, we estimate its impact on individual financial outcomes. We find that the law reduces the likelihood of incurring non-medical debt in collections and the number of non-medical accounts in collections. In addition, we find evidence that credit scores increased and suggestive evidence that the number of delinquent accounts decreased for individuals in more exposed counties. Our results suggest hospital billing regulations can improve targeted individuals' financial outcomes.