A Bargain at Twice the Price? California Hospital Prices in the New Millennium

Yaa Akosa Antwi, Martin Gaynor, William B. Vogt

NBER Working Paper No. 15134
Issued in July 2009
NBER Program(s):Health Care

We use data from California to document and offer possible explanations for the sharp increase in hospital prices charged to private payers after 1999. We find a downward trend in price for private pay patients in the 1990s and a rapid upward trend beginning in 1999, amounting to an annual average increase of 10.6% per year over 1999-2005. Prices in 2006 were almost double prices in 1999. By contrast, there was little discernable trend in prices for Medicare and Medicaid patients, although these prices varied from year-to-year. Surprisingly, the increase in prices is not correlated, geographically, with the change in hospital market concentration. For example, the greatest price rises came from hospitals in monopoly and highly concentrated counties which experienced little or no change over our sample period. Two recent California state hospital regulations, the seismic retrofit mandate and the mandatory nurse staffing ratio affected hospital costs. However, the cost increases due to the nursing staffing regulations are not large enough to account for the price increase, and the price increase is not substantially correlated with the costs of compliance with the seismic retrofit mandate. Therefore, the source of the near-doubling of California hospital prices remains something of a mystery.

download in pdf format
   (99 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w15134

Published: Yaa Akosa Antwi & Martin S. Gaynor & William B. Vogt, 2009. "A Bargain at Twice the Price? California Hospital Prices in the New Millennium," Forum for Health Economics & Policy, Berkeley Electronic Press, vol. 12(1). citation courtesy of

Users who downloaded this paper also downloaded* these:
Cook, Gaynor, Stephens, and Taylor w16077 The Effect of Hospital Nurse Staffing on Patient Health Outcomes: Evidence from California's Minimum Staffing Regulation
Gaynor, Ho, and Town w19800 The Industrial Organization of Health Care Markets
Gaynor and Town w17208 Competition in Health Care Markets
Gruber, Sen, and Stabile w8962 Estimating Price Elasticities When there is Smuggling: The Sensitivity of Smoking to Price in Canada
Gaynor, Kleiner, and Vogt w16656 A Structural Approach to Market Definition With an Application to the Hospital Industry
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us