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Geographic variation in commercial medical-care expenditures: A framework for decomposing price and utilization

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  • Dunn, Abe
  • Shapiro, Adam Hale
  • Liebman, Eli

Abstract

This study introduces a new framework for measuring and analyzing medical-care expenditures. The framework focuses on expenditures at the disease level that are decomposed between price and utilization. We find that both price and utilization differences are important contributors to expenditure differences across commercial markets. Further examination shows that for some diseases utilization drives variation while for others price is more important. Finally, when disease-specific measures are aggregated across diseases, much of the important disease-specific variation is masked, leading to much smaller measures of aggregate variation.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 32 (2013)
Issue (Month): 6 ()
Pages: 1153-1165

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Handle: RePEc:eee:jhecon:v:32:y:2013:i:6:p:1153-1165

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Web page: http://www.elsevier.com/locate/inca/505560

Related research

Keywords: Price indexes; Productivity; Geographic variation in health care spending; Regional price indexes; Health care spending variation;

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References

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  1. Victor R. Fuchs & Mark McClellan & Jonathan Skinner, 2001. "Area Differences in Utilization of Medical Care and Mortality Among U.S. Elderly," NBER Working Papers 8628, National Bureau of Economic Research, Inc.
  2. Louise Sheiner & David M. Cutler, 1999. "The Geography of Medicare," American Economic Review, American Economic Association, American Economic Association, vol. 89(2), pages 228-233, May.
  3. Aizcorbe, Ana & Nestoriak, Nicole, 2011. "Changing mix of medical care services: Stylized facts and implications for price indexes," Journal of Health Economics, Elsevier, Elsevier, vol. 30(3), pages 568-574, May.
  4. Bradley, Ralph, 2013. "Feasible methods to estimate disease based price indexes," Journal of Health Economics, Elsevier, Elsevier, vol. 32(3), pages 504-514.
  5. David M. Cutler & Mark McClellan & Joseph P. Newhouse & Dahlia Remler, 1998. "Are Medical Prices Declining? Evidence From Heart Attack Treatments," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 113(4), pages 991-1024, November.
  6. Gautam Gowrisankaran & Aviv Nevo & Robert Town, 2013. "Mergers When Prices are Negotiated: Evidence from the Hospital Industry," NBER Working Papers 18875, National Bureau of Economic Research, Inc.
  7. Irving Shapiro & Matthew D. Shapiro & David Wilcox, 2001. "Measuring the value of Cataract Surgery," NBER Chapters, in: Medical Care Output and Productivity, pages 411-438 National Bureau of Economic Research, Inc.
  8. Berndt, Ernst R. & Cutler, David M. & Frank, Richard G. & Griliches, Zvi & Newhouse, Joseph P. & Triplett, Jack E., 2000. "Medical care prices and output," Handbook of Health Economics, Elsevier, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 3, pages 119-180 Elsevier.
  9. Abe Dunn & Eli Liebman & Adam Hale Shapiro, 2012. "Implications of Utilization Shifts on Medical-Care Price Measurement," BEA Working Papers, Bureau of Economic Analysis 0087, Bureau of Economic Analysis.
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