Existing literature on hospital pricing and price variation is split on whether price differentials in hospital billing are demand or supply led. To harmonize this literature, we use data from the Medicare Hospital Compare website to evaluate the interaction between demand and supply factors that influence hospital pricing structure. We use consumers’ net willingness-to-pay (net WTP) as the dependent variable to analyze how providers exploit factors that enable a provider to charge high prices to consumers. We find that high prices are reflective of the perceived quality but find no relationship with the actual quality of care. In line with previous literature, our analysis shows no evidence of cross- subsidization between inpatient DRGs. However, we find no interaction of factors that could adequately explain the full extent of observed variation in provider prices. We conclude that the question, “Should I buy here or keep driving?” is complex and cannot be answered by a simple analysis of which healthcare provider is cheaper.
Health research has been rapidly growing within the realm of development economics. A recent and important question is whether national health expenditures significantly influence the health outcomes of a nation. While health budgets increase by millions of dollars every year, there is no consensus on whether these increases have a positive effect on overall medical care. Using macro-economic data from 155 developed, transition, and developing nations, I provide econometric evidence towards this question. Furthermore, I attempt to show variable returns to scale by separating the country set into four human development levels. The results show a significant and positive relationship between health expenditures and health outcomes, but fail to show a trend in returns to scale.
A political science thesis examining the impact of the 2010 Affordable Care Act on the cost of health care in the United States. The incentives of the participants in the health care market are analyzed in order to explain why health care costs continue to grow. This thesis also looks at the why the Affordable Care Act became law and provides a conclusion on the likely success of the Affordable Care Act at controlling health care cost growth.