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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.

Suggested Citation

  • Dunn, Abe & Shapiro, Adam Hale & Liebman, Eli, 2013. "Geographic variation in commercial medical-care expenditures: A framework for decomposing price and utilization," Journal of Health Economics, Elsevier, vol. 32(6), pages 1153-1165.
    • Handle: RePEc:eee:jhecon:v:32:y:2013:i:6:p:1153-1165
    DOI: 10.1016/j.jhealeco.2013.09.006
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    References listed on IDEAS

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    9. Aizcorbe, Ana & Nestoriak, Nicole, 2011. "Changing mix of medical care services: Stylized facts and implications for price indexes," Journal of Health Economics, Elsevier, vol. 30(3), pages 568-574, May.
    10. 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.
    11. Abe Dunn & Eli Liebman & Adam Hale Shapiro, 2015. "Implications of Utilization Shifts on Medical‐care Price Measurement," Health Economics, John Wiley & Sons, Ltd., vol. 24(5), pages 539-557, May.
    12. A. J. Culyer & J. P. Newhouse (ed.), 2000. "Handbook of Health Economics," Handbook of Health Economics, Elsevier, edition 1, volume 1, number 1.
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    Cited by:

    1. Abe Dunn & Eli Liebman & Adam Hale Shapiro, 2016. "Decomposing Medical Care Expenditure Growth," NBER Chapters, in: Measuring and Modeling Health Care Costs, pages 81-111, National Bureau of Economic Research, Inc.
    2. Eggli, Yves & Stadelmann, Pierre & Piaget-Rossel, Romain & Marti, Joachim, 2019. "Heterogeneity in The drivers of health expenditures financed by health insurance in a fragmented health system: The case of Switzerland," Health Policy, Elsevier, vol. 123(12), pages 1275-1281.
    3. Amy Finkelstein & Matthew Gentzkow & Heidi Williams, 2016. "Sources of Geographic Variation in Health Care: Evidence From PatientMigration," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(4), pages 1681-1726.
    4. Abe Dunn & Adam Hale Shapiro, 2018. "Physician Competition and the Provision of Care: Evidence from Heart Attacks," American Journal of Health Economics, MIT Press, vol. 4(2), pages 226-261, Spring.
    5. Dizioli, Allan & Pinheiro, Roberto, 2016. "Health insurance as a productive factor," Labour Economics, Elsevier, vol. 40(C), pages 1-24.
    6. Dunn, Abe, 2016. "Health insurance and the demand for medical care: Instrumental variable estimates using health insurer claims data," Journal of Health Economics, Elsevier, vol. 48(C), pages 74-88.
    7. Abe Dunn & Eli Liebman & Adam Hale Shapiro, 2015. "Implications of Utilization Shifts on Medical‐care Price Measurement," Health Economics, John Wiley & Sons, Ltd., vol. 24(5), pages 539-557, May.
    8. Anne E. Hall, 2015. "Regional Patterns in Medical Technology Utilization," BEA Working Papers 0126, Bureau of Economic Analysis.
    9. 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.
    10. Calvin Ackley & Abe Dunn & Eli Liebman & Adam Hale Shapiro, 2024. "Are Medicaid and Medicare Patients Treated Equally?," Working Paper Series 2024-14, Federal Reserve Bank of San Francisco.
    11. Schleiniger, Reto, 2014. "Health care cost in Switzerland: Quantity- or price-driven?," Health Policy, Elsevier, vol. 117(1), pages 83-89.

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    More about this item

    Keywords

    Price indexes; Productivity; Geographic variation in health care spending; Regional price indexes; Health care spending variation;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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