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Returns to Local-Area Health Care Spending: Evidence from Health Shocks to Patients Far from Home

  • Joseph J. Doyle
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    Health care spending varies widely across markets, and previous research finds little evidence that higher spending translates into better health outcomes. The main innovation in this paper exploits this cross-sectional variation in hospital spending in a new way by considering emergency patients who are exposed to healthcare systems when they are far from home. Visitors to Florida who become ill in high-spending areas have significantly lower mortality rates compared to visitors in lower spending areas. The results are robust within groups of similar visitors and within groups of destinations that appear to be close demand substitutes -- areas that likely attract similar visitors. (JEL H75, I11, I18)

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    Article provided by American Economic Association in its journal American Economic Journal: Applied Economics.

    Volume (Year): 3 (2011)
    Issue (Month): 3 (July)
    Pages: 221-43

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    Handle: RePEc:aea:aejapp:v:3:y:2011:i:3:p:221-43
    Note: DOI: 10.1257/app.3.3.221
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    1. Cutler, David M., 2007. "The lifetime costs and benefits of medical technology," Journal of Health Economics, Elsevier, vol. 26(6), pages 1081-1100, December.
    2. 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, vol. 113(4), pages 991-1024, November.
    3. Cutler, David, 2007. "The Lifetime Costs and Benefits of Medical Technology," Scholarly Articles 2643640, Harvard University Department of Economics.
    4. Gowrisankaran, Gautam & Town, Robert J., 1999. "Estimating the quality of care in hospitals using instrumental variables," Journal of Health Economics, Elsevier, vol. 18(6), pages 747-767, December.
    5. Amitabh Chandra & Douglas O. Staiger, 2007. "Productivity Spillovers in Health Care: Evidence from the Treatment of Heart Attacks," Journal of Political Economy, University of Chicago Press, vol. 115, pages 103-140.
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