Abe Dunn

Do Physicians Possess Market Power

We study the degree to which greater physician concentration leads to higher service prices charged by physicians in the commercially insured medical care market. Using a database of physicians throughout the United States, we construct physician-firm concentration measures based on market boundaries defined by fixed driving times, which we label the fixed-travel-time Herfindahl-Hirschman index. We link these concentration measures to health insurance claims. We find that physicians in more concentrated markets charge higher service prices; a physician in the 90th percentile of market concentration will charge 14–30 percent higher fees than a physician in the 10th percentile. Our estimates imply that physician consolidation has caused about an 8 percent increase in fees on average over the last 20 years and substantially higher increases in concentrated markets.

Drug Innovations and Welfare Measures Computed from Market Demand: The Case of Anti-cholesterol Drugs

The pharmaceutical industry is characterized as having substantial investment in R&D and a large number of new product introductions, which poses special problems for price measurement caused by the quality of drug products changing over time. This paper applies recent demand estimation techniques to individual-level data to construct a constant-quality price index for anti-cholesterol drugs. Although the average price for anti-cholesterol drugs does not change over the sample period, I find that the constant-quality price index drops by 27 percent, a pace more in line with our expectations in such a dynamic segment of the industry. (JEL C43, L11, L65, O31)

Adjusting Health Expenditures for Inflation: A Review of Measures for Health Services Research in the United States

OBJECTIVE To provide guidance on selecting the most appropriate price index for adjusting health expenditures or costs for inflation. DATA SOURCES Major price index series produced by federal statistical agencies. STUDY DESIGN We compare the key characteristics of each index and develop suggestions on specific indexes to use in many common situations and general guidance in others. DATA COLLECTION/EXTRACTION METHODS Price series and methodological documentation were downloaded from federal websites and supplemented with literature scans. PRINCIPAL FINDINGS The gross domestic product implicit price deflator or the overall Personal Consumption Expenditures (PCE) index is preferable to the Consumer Price Index (CPI-U) to adjust for general inflation, in most cases. The Personal Health Care (PHC) index or the PCE health-by-function index is generally preferred to adjust total medical expenditures for inflation. The CPI medical care index is preferred for the adjustment of consumer out-of-pocket expenditures for inflation. A new, experimental disease-specific Medical Care Expenditure Index is now available to adjust payments for disease treatment episodes. CONCLUSIONS There is no single gold standard for adjusting health expenditures for inflation. Our discussion of best practices can help researchers select the index best suited to their study.

Medical Care Price Indexes for Patients with Employer-Provided Insurance: Nationally Representative Estimates from MarketScan Data

OBJECTIVE Commonly observed shifts in the utilization of medical care services to treat diseases may pose problems for official price indexes at the Bureau of Labor Statistics (BLS) that do not account for service shifts. We examine how these shifts may lead to different price estimates than those observed in official price statistics at the BLS. DATA SOURCES We use a convenience sample of enrollees with employer-provided insurance from the MarketScan database for the years 2003 to 2007. Population weights that consider the age, sex, and geographic distribution of enrollees are assigned to construct representative estimates. STUDY DESIGN We compare two types of price indexes: (1) a Service Price Index (SPI) that is similar to the BLS index, which holds services fixed and measures the prices of the underlying treatments; (2) a Medical Care Expenditure Index (MCE) that measures the cost of treating diseases and allows for utilization shifts. PRINCIPAL FINDINGS Over the entire period of study the CAGR of the SPI grows 0.7 percentage points faster than the preferred MCE index. CONCLUSIONS Our findings suggest that the health component of inflation may be overstated by 0.7 percentage points per year, and real GDP growth may be understated by a similar amount. However, more work may be necessary to precisely replicate the indexes of the BLS to obtain a more accurate measure of these price differences.

Geographic variation in commercial medical-care expenditures: A framework for decomposing price and utilization

This study introduces a new framework for measuring and analyzing medical-care expenditures. The framework focuses on expenditures at the disease level that are decomposed between price and utilization. We find that both price and utilization differences are important contributors to expenditure differences across commercial markets. Further examination shows that for some diseases utilization drives variation while for others price is more important. Finally, when disease-specific measures are aggregated across diseases, much of the important disease-specific variation is masked, leading to much smaller measures of aggregate variation.

Health Care Spending Slowdown From 2000 To 2010 Was Driven By Lower Growth In Cost Per Case, According To A New Data Source.

In 2015 the Bureau of Economic Analysis released an experimental set of measures referred to as the Health Care Satellite Account, which tracks national health care spending by medical condition. These statistics improve the understanding of the health care sector by blending medical claims data and survey data to present measures of national spending and cost of treatment by condition. This article introduces key aspects of the new account and uses it to study the health spending slowdown that occurred in the period 2000-10. Our analysis of the account reveals that the slowdown was driven by a reduction of growth in cost per case but that spending trends varied greatly across conditions and differentially affected the slowdown. More than half of the overall slowdown was accounted for by a slowdown in spending on circulatory conditions. However, there were more dramatic slowdowns in spending on categories such as endocrine system and musculoskeletal conditions than in spending on other categories, such as cancers.

Physician payments under health care reform

This study examines the impact of major health insurance reform on payments made in the health care sector. We study the prices of services paid to physicians in the privately insured market during the Massachusetts health care reform. The reform increased the number of insured individuals as well as introduced an online marketplace where insurers compete. We estimate that, over the reform period, physician payments increased at least 11 percentage points relative to control areas. Payment increases began around the time legislation passed the House and Senate-the period in which their was a high probability of the bill eventually becoming law. This result is consistent with fixed-duration payment contracts being negotiated in anticipation of future demand and competition.

Implications of Utilization Shifts on Medical-Care Price Measurement

The medical-care sector often experiences changes in medical protocols and technologies that cause shifts in treatments. However, the commonly used medical-care price indexes reported by the Bureau of Labor Statistics hold the mix of medical services fixed. In contrast, episode expenditure indexes, advocated by many health economists, track the full cost of disease treatment, even as treatments shift across service categories (e.g., inpatient to outpatient hospital). In our data, we find that these two conceptually different measures of price growth show similar aggregate rates of inflation over the 2003-2007 period. Although aggregate trends are similar, we observe differences when looking at specific disease categories.

Does Medicare Part D Save Lives

We examine the impact of Medicare Part D on mortality for the population over the age of 65. We identify the effects of the reform using variation in drug coverage across counties before the reform was implemented. Studying mortality rates immediately before and after the reform, we find that cardiovascular-related mortality drops significantly in those counties most affected by Part D. Estimates suggest that up to 26,000 more individuals were alive in mid-2007 because of the Part D implementation in 2006. We estimate the welfare benefit from lives saved to range from

Physician Market Power and Medical-Care Expenditures

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