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 covering 28 percent of individuals with employer-sponsored health insurance in the US to study the variation in health spending on the privately insured, examine the structure of insurer-hospital contracts, and analyze the variation in hospital prices across the nation. Health spending per privately insured beneficiary differs by a factor of three across geographic areas and has a very low correlation with Medicare spending. For the privately insured, half of the spending variation is driven by price variation across regions and half is driven by quantity variation. Prices vary substantially across regions, across hospitals within regions, and even within hospitals. For example, even for a near homogenous service such as lower-limb MRIs, about a fifth of the to...