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A Test of Supply-side Explanations of Geographic Variation in Health Care Use

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  • Kevin Callison
  • Robert Kaestner
  • Jason Ward

Abstract

Evidence of regional variation in health care utilization has been well-documented over the past 40 years. Yet uncertainty persists about whether this variation is primarily the result of supply-side or demand-side forces, and the difference matters for both theory and policy. In this article, we provide new evidence as to the cause of geographic variation in health care utilization. We do so by examining changes in health care use by the near-elderly as they transition from being uninsured into Medicare. Results provide support for a causal supply-side explanation of regional variation. Estimates indicate that gaining Medicare coverage in above-median spending regions increases the probability of at least one hospital visit by 36% and the probability of having more than five doctor visits by 25% relative to similar individuals in below-median spending regions.

Suggested Citation

  • Kevin Callison & Robert Kaestner & Jason Ward, 2018. "A Test of Supply-side Explanations of Geographic Variation in Health Care Use," NBER Working Papers 25037, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:25037
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    Cited by:

    1. Bhalotra, Sonia R. & Rocha, Rudi & Soares, Rodrigo R., 2019. "Does Universalization of Health Work? Evidence from Health Systems Restructuring and Expansion in Brazil," IZA Discussion Papers 12111, Institute of Labor Economics (IZA).
    2. Sonia Bhalotra & Rudi Rocha & Rodrigo R. Soares, 2020. "Can Universalization of Health Work? Evidence from Health Systems Restructuring and Expansion in Brazil," Working Papers 03, Instituto de Estudos para Políticas de Saúde.
    3. Bernal-Delgado, Enrique & Comendeiro-Maaløe, Micaela & Ridao-López, Manuel & Sansó Rosselló, Andreu, 2020. "Factors underlying the growth of hospital expenditure in Spain in a period of unexpected economic shocks: A dynamic analysis on administrative data," Health Policy, Elsevier, vol. 124(4), pages 389-396.
    4. Clemente, Jesús & Lázaro-Alquézar, Angelina & Montañés, Antonio, 2019. "US state health expenditure convergence: A revisited analysis," Economic Modelling, Elsevier, vol. 83(C), pages 210-220.

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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I1 - Health, Education, and Welfare - - Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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