Place-Based Variation in Health Care: Evidence from Mandatory Movers in the U.S. Military Health System

There is increasing evidence on regional variations in U.S. Medicare utilization based on older patients who move. Yet evidence is limited for younger ages in the U.S., and movers may differ systematically from those who don’t move. In this paper, we harness the mandatory migration of military personnel and dependents (age 5 to 64) to estimate supply and demand factors in a system of care in which military physicians are salaried and copayments and deductibles are negligible. In our sample of 3 million enrollees, we find that place or supply effects explain as much as 80 percent of the overall regional variation for both the entire sample and for active-duty personnel. These regional place effects are correlated across age groups, with correlations as high as 0.84 between middle-aged and older military enrollees. These regional supply-side variations cannot be explained by differences in health, financial incentives, or quality of care, but appear consistent with location-specific differences in physician beliefs.