Stuart V. Craig
The Wharton School
The University of Pennsylvania
NBER Working Papers and Publications
|December 2015||The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured|
with Zack Cooper, Martin Gaynor, John Van Reenen: w21815
We use insurance claims data for 27.6 percent of individuals with private employer-sponsored insurance in the US between 2007 and 2011 to examine the variation in health spending and in hospitals’ transaction prices. We document the variation in hospital prices within and across geographic areas, examine how hospital prices influence the variation in health spending on the privately insured, and analyze the factors associated with hospital price variation. Four key findings emerge. First, health care spending per privately insured beneficiary varies by a factor of three across the 306 Hospital Referral Regions (HRRs) in the US. Moreover, the correlation between total spending per privately insured beneficiary and total spending per Medicare beneficiary across HRRs is only 0.14. Second, var...