Healthcare Markets
Cost-effectiveness, provider payment, moral hazard, hospital market power, ACA MLR and CMS-HCC risk adjustment — every calculation live and editable.
Determinants of healthcare demand
| Symbol | Determinant | Sign | Data source | Rationale |
|---|---|---|---|---|
| $p_{oop}$ | Out-of-pocket price (copay/coinsurance) | − | MEPS; HCCI | RAND HIE: arc-elasticity ≈ −0.2 for total medical spend. |
| $\rho$ | Coinsurance rate ρ | − | Plan schedules; KFF EHBS | Every 10 pp of ρ cuts utilization ~2%. |
| $H$ | Underlying health status | − | NHIS; CMS HCC | Better health ⇒ less demand for care (except preventive). |
| $\text{age}$ | Age | + | Census; MEPS | Convex age–spending curve; sharp after 65. |
| $Y$ | Household income | ± | CPS ASEC | Weakly income-elastic overall; strongly + for dental/vision/elective. |
| $Ins$ | Insurance coverage | + | ACS; NHIS | Reduces effective price; Oregon HIE showed ~+25% ER use. |
| $d$ | Distance to provider | − | Provider directories; HRSA | Travel time is a shadow price (Currie & Reagan 2003). |
| $Q$ | Perceived provider quality | + | CAHPS; HospitalCompare | Star ratings shift enrollment and utilization. |
| $E$ | Epidemiological shock | + | CDC WONDER; WHO | Pandemics, flu seasons shift demand curve out. |
| $\pi_{drug}$ | Formulary tier / drug price | − | Medi-Span; SSR | Higher tier reduces adherence (Chandra et al.). |
Determinants of healthcare supply
| Symbol | Determinant | Sign | Data source | Rationale |
|---|---|---|---|---|
| $R$ | Reimbursement rate (Medicare/private) | + | CMS PFS; DRG; commercial | Rate cuts reduce access (Clemens–Gottlieb 2014). |
| $w_{md}$ | Physician / nurse wage | − | BLS OES | Higher input cost shifts MC up. |
| $K$ | Hospital beds / capacity | + | AHA Annual Survey | Capital stock caps short-run supply. |
| $T$ | Technology (imaging, robotics) | + | AHA; Bureau of Economic Analysis | Cost-lowering AND demand-raising (Baumol's disease qualifier). |
| $Reg$ | CON laws, licensure, EMTALA | − | State CON registry | CON restricts entry; EMTALA mandates uncompensated care. |
| $HHI$ | Hospital-market concentration | − | AHRF; HHI datasets | Concentration reduces effective supply and raises prices (Dafny). |
| $M$ | Malpractice premium | − | MLM; NPDB | Raises fixed costs; ties into defensive medicine. |
| $\phi$ | GPO / vertical integration | ± | MedPAC; DOJ/FTC | Efficiencies vs. foreclosure; empirical mixed. |