Room: Phillips 407
Time: Wed 10:15 AM-11:45 AM

Geographic variations and market definitions

Chair: David Mushinski

Session Description

Large regional variations in health care costs throughout the United States have become an emerging stylized fact in health economics. For example, Miami, FL experienced a 5% rate of medical cost growth in 2006, compared with the 2.3% growth rate experienced in Salem, OR in the same year. These variations are especially concerning in a health care system constantly looking for ways to cut costs without reducing quality. This session explores some potential drivers of regional variations in cost, ultimately yielding insight into mechanisms that could lead to more equitable and cost effective care.

Chernew et al begin the session by analyzing the geographic variations in health care costs for people with private insurance, which provides a nice addition to the literature which has been driven largely by the Dartmouth Atlas of Health Care, which uses Medicare data. The authors find a positive correlation in inpatient days between the commercially insured population and Medicare population across regions, but an inverse relationship in costs. They discuss potential explanations, focusing on the role of market structure and prices.

The rest of the session is focused on potential drivers of regional variations in spending. McCluer explores the role of illegal collusion between health care providers, showing an incremental role in explaining health costs. Johar et al investigate the impact of wait times on health care utilization. Using individual data from Australia, the authors find that longer waiting times for procedures are associated with a lower demand for insurance.

This session begins to explain some of the drivers of this large issue. Further work on understanding variations in care is necessary to help contextualize the potential promise of various policy recommendations that have been aimed at achieving standardized and cost-effective health care.

Key Terms None Listed

Session Organizer: Randy Ellis (Boston University)

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Presentations

1. Geographic Correlation between Large Firm, Commercial Spending and Medicare Spending

   Presenter: Michael Chernew (Harvard University)

   Discussant: Troy Quast

2. Prices and Quantities in Health Care Antitrust Damages

   Presenter: Forrest McCluer (Greylock McKinnon Associates)

   Discussant: Cory Capps (Bates White)

3. The demand for private health insurance: do waiting lists or waiting times matter?

   Presenter: Meliyanni Johar (University of Technology, Sydney)

   Discussant: David Mushinski