Working Paper: NBER ID: w19800
Authors: Martin Gaynor; Kate Ho; Robert Town
Abstract: The US health care sector is large and growing - health care spending in 2011 amounted to $2.7 trillion and 18% of GDP. Approximately half of health care output is allocated via markets. In this paper, we analyze the industrial organization literature on health care markets focusing on the impact of competition on price, quality and treatment decisions for health care providers and health insurers. We conclude with a discussion of research opportunities for industrial organization economists, including opportunities created by the US Patient Protection and Affordable Care Act.
Keywords: health care markets; competition; quality; pricing
JEL Codes: I11; L1; L10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased competition among hospitals (I11) | Lower mortality rates for patients (I14) |
| Increased competition among hospitals (I11) | Improved quality of care (L15) |
| Higher concentration of hospitals (I11) | Higher risk-adjusted one-year mortality rates for heart attack patients (I11) |
| Hospital mergers (G34) | Lower quality of care (I14) |
| Hospital mergers (G34) | Higher prices for consumers (D49) |
| Increased competition (L13) | Higher effort to improve care quality by hospitals (I11) |
| Increased competition (L13) | Increased prices due to higher costs associated with quality improvements (L15) |