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The (Paper)Work of Medicine: Understanding International Medical Costs

Author

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  • David M. Cutler
  • Dan P. Ly

Abstract

This paper draws on international evidence on medical spending to examine what the United States can learn about making its healthcare system more efficient. We focus primarily on understanding contemporaneous differences in the level of spending, generally from the 2000s. Medical spending differs across countries either because the price of services differs (for example, a coronary bypass surgery operation may cost more in the United States than in other countries) or because people receive more services in some countries than in others (for example, more bypass surgery operations). Within the price category, there are two further issues: whether factors earn different returns across countries and whether more clinical or administrative personnel are required to deliver the same care in different countries. We first present the results of a decomposition of healthcare spending along these lines in the United States and in Canada. We then delve into each component in more detail—administrative costs, factor prices, and the provision of care received—bringing in a broader range of international evidence when possible. Finally, we touch upon the organization of primary and chronic disease care and discuss possible gains in that area.

Suggested Citation

  • David M. Cutler & Dan P. Ly, 2011. "The (Paper)Work of Medicine: Understanding International Medical Costs," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 3-25, Spring.
  • Handle: RePEc:aea:jecper:v:25:y:2011:i:2:p:3-25
    Note: DOI: 10.1257/jep.25.2.3
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.25.2.3
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Fadlon, Itzik & Van Parys, Jessica, 2020. "Primary care physician practice styles and patient care: Evidence from physician exits in Medicare," Journal of Health Economics, Elsevier, vol. 71(C).
    2. Laurence Seidman, 2013. "Medicare for All," Challenge, Taylor & Francis Journals, vol. 56(1), pages 88-115.
    3. Kuhn, Michael & Prettner, Klaus, 2016. "Growth and welfare effects of health care in knowledge-based economies," Journal of Health Economics, Elsevier, vol. 46(C), pages 100-119.
    4. Stuart V. Craig & Keith Marzilli Ericson & Amanda Starc, 2018. "How Important Is Price Variation Between Health Insurers?," NBER Working Papers 25190, National Bureau of Economic Research, Inc.
    5. Nadja Kairies, 2012. "P4P, Reputation and the Reduction of Costly Overprovision," Ruhr Economic Papers 0331, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    6. Keane, Michael P. & McCormick, Barry & Popławska, Gosia, 2020. "Health care spending in the US vs UK: The roles of medical education costs, malpractice risk and defensive medicine," European Economic Review, Elsevier, vol. 124(C).
    7. Bloom, David E. & Kuhn, Michael & Prettner, Klaus, 2018. "Health and Economic Growth," IZA Discussion Papers 11939, Institute of Labor Economics (IZA).
    8. Korenman, Sanders D. & Remler, Dahlia K., 2016. "Including health insurance in poverty measurement: The impact of Massachusetts health reform on poverty," Journal of Health Economics, Elsevier, vol. 50(C), pages 27-35.
    9. Eric Apaydin, 2020. "Administrative Work and Job Role Beliefs in Primary Care Physicians: An Analysis of Semi-Structured Interviews," SAGE Open, , vol. 10(1), pages 21582440198, January.
    10. Raquel Fonseca & François Langot & Pierre-Carl Michaud & Thepthida Sopraseuth, 2020. "Understanding Cross-country Differences in Health Status and Expenditures," NBER Working Papers 26876, National Bureau of Economic Research, Inc.
    11. Son Hong Nghiem & Luke Brian Connelly, 2017. "Convergence and determinants of health expenditures in OECD countries," Health Economics Review, Springer, vol. 7(1), pages 1-11, December.
    12. repec:zbw:rwirep:0331 is not listed on IDEAS
    13. Ferreira, Pedro Cavalcanti & Gomes, Diego B.P., 2017. "Health care reform or more affordable health care?," Journal of Economic Dynamics and Control, Elsevier, vol. 79(C), pages 126-153.
    14. Abe Dunn & Adam Hale Shapiro, 2014. "Do Physicians Possess Market Power?," Journal of Law and Economics, University of Chicago Press, vol. 57(1), pages 159-193.
    15. repec:dau:papers:123456789/12810 is not listed on IDEAS
    16. Brigitte Dormont & Anne-Laure Samson, 2017. "Does it pay to be a doctor in France?," Working Papers hal-01518428, HAL.
    17. Jillian Chown & David Dranove & Craig Garthwaite & Jordan Keener, 2019. "The Opportunities and Limitations of Monopsony Power in Healthcare: Evidence from the United States and Canada," NBER Working Papers 26122, National Bureau of Economic Research, Inc.
    18. Kairies, Nadja, 2012. "P4P, Reputation and the Reduction of Costly Overprovision," Ruhr Economic Papers 331, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

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