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KMID : 1170320220280040079
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Korean Journal of Health Economics and Policy
2022 Volume.28 No. 4 p.79 ~ p.102
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Decomposition of Regional Variation in Medical Expenditure and Utilization
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Wi Su-Hyeon
Choi Yun-Ji
Hong Sok-Chul
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Abstract
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Regional variation in healthcare expenditure is one of the key policy interests in pubilc health. There has been attempts in the literature to decompose the regional variation into demand-side factors, including differences in patient’s health and preferences, and supply-side factors such as regional infrastructure and the region’s physician practice styles. In particular, some recent studies have adopted a methodology introduced by Finkelstein, Gentzkow, and Williams (2016) which exploits patient migration. Assuming that a patient’s preference and health status do not change rapidly around the move, they decompose the sources of regional variation into patient-specific factors and place-specific factors. In extension to the literature this paper uses public insurance claims data and patient’s residential region records to decompose the regional variation in healthcare utilization into patient-specific factors and place-specific factors. We find that place-specific factors explain around 10 percent of the regional variation in inpatient expenditure. As for outpatient expenditure, place-specific factors explain around 7 percent of the variation in clinics but around 40~87 percent in hospitals. In general the supply share of the regional variation is smaller in Korea as compared to the results from other countries.
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KEYWORD
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Healthcare Expenditure and Utilization, Regional Variation, Decomposition
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