Working Paper: NBER ID: w19320
Authors: David Cutler; Jonathan Skinner; Ariel Dora Stern; David Wennberg
Abstract: There is considerable controversy about the causes of regional variations in health care expenditures. Using vignettes from patient and physician surveys linked to fee-for-service Medicare expenditures, this study asks whether patient demand-side factors or physician supply-side factors explain these variations. The results indicate that patient demand is relatively unimportant in explaining variations. Physician organizational factors matter, but the most important factor is physician beliefs about treatment. In Medicare, we estimate that 35 percent of spending for end-of-life care, and 12 percent of spending for heart attack patients (and for all enrollees) is associated with physician beliefs unsupported by clinical evidence.
Keywords: health care spending; regional variation; physician beliefs; patient preferences
JEL Codes: H51; I1; I11; I18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Physician beliefs (I11) | Medicare expenditures (H51) |
| Physician beliefs (I11) | Health care spending (H51) |
| Physician beliefs (I11) | Expenditures without corresponding patient demand or clinical justification (H51) |
| Physician organizational factors (I11) | Medicare expenditures (H51) |