Working Paper: CEPR ID: DP18029
Authors: Jonathan Dingel; Joshua Gottlieb; Maya Lozinski; Pauline Mourot
Abstract: We measure the importance of increasing returns to scale and trade in medical services. Using Medicare claims data, we document that “imported” medical care — services produced by a medical provider in a different region — constitute about one-fifth of US healthcare consumption. Larger regions specialize in producing less common procedures, which are traded more. These patterns reflect economies of scale: larger regions produce higher-quality services because they serve more patients. Because of increasing returns and trade costs, policies to improve access to care face a proximity-concentration tradeoff. Production subsidies and travel subsidies can impose contrasting spillovers on neighboring regions.
Keywords: Healthcare; Market Access; Medical Practice; Trade in Services
JEL Codes: F12; F14; I11; R12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Production subsidies (H23) | Contrasting effects on neighboring regions (R11) |
| Travel subsidies (H23) | Contrasting effects on neighboring regions (R11) |
| Local increasing returns and trade costs (F12) | Spatial patterns of healthcare (I11) |
| Larger regions (R12) | Higher-quality services (L15) |
| Larger regions (R12) | Stronger home market effect (R21) |
| Larger markets (D40) | Higher-quality services due to economies of scale (H49) |
| 10% increase in demand (R22) | 6% increase in service quality (L15) |
| Increase in population (J11) | Disproportionate increase in exports of medical services (I11) |
| Larger residential population (R23) | Increased exports of medical care (I11) |