Working Paper
Market Size and Trade in Medical Services
Abstract: We measure the importance of increasing returns to scale and trade in medical services. Using Medicare claims data, we document that “imported” medical care—services produced by a medical provider in a different region—constitute about one-fifth of US healthcare consumption. Larger regions specialize in producing less common procedures, which are traded more. These patterns reflect economies of scale: larger regions produce higher-quality services because they serve more patients. Because of increasing returns and trade costs, policies to improve access to care face a proximity-concentration tradeoff. Production subsidies and travel subsidies can impose contrasting spillovers on neighboring regions.
Keywords: Market-size effects; Trade in services; Medicare claims data; Healthcare access;
JEL Classification: F14; I11; F12; R12;
https://doi.org/10.21034/iwp.68
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Bibliographic Information
Provider: Federal Reserve Bank of Minneapolis
Part of Series: Opportunity and Inclusive Growth Institute Working Papers
Publication Date: 2023-04-04
Number: 068