With New Data on the Privately Insured, Zack Cooper’s Study Shows Where and Why Health Care Is So Expensive

Publication date 
December 15, 2015

(Updated December 16, 2015)

With a huge dataset on the privately insured, Yale health economist Zack Cooper and co-authors shed new light on why and where medical costs are expensive. The recently released paper, “The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured,” uses insurance claims data for 28 percent of Americans with private employer-sponsored insurance, and looks at the variation in health spending and in hospitals’ transaction prices within and across geographic areas.

This is the largest study of medical expenses done so far. Prior to this, studies on health care spending came primarily from analizing Medicare data, which only covers about 16% of the US population. This new dataset, encompassing 92 billion health insurance claims from 88 million people covered by three of the nation’s largest insurance companies: Aetna, Humana, and UnitedHealth, provides a better understanding of what influences health care pricing and how competition and monopolies play into the costs.  

Other authors on the paper are Stuart Craig (University of Pennsylvania), Martin Gaynor (Carnegie Mellon University, University of Bristol, and NBER), and John Van Reenen (Centre for Economic Performance, LSE and NBER).

Media coverage:

The New York Times: ”The Experts Were Wrong About the Best Places for Better and Cheaper Health Care” 

Yale News: “Hospital Prices Show ‘Mind-Boggling’ Variation across U.S. Driving Up Health Care Costs”

NPR’s Marketplace: “An Unprecedented Look at Medical Costs Nationwide”

Minneapolis Star Tribune: “Health Care in Minnesota Not Always a Bargain, Study Finds”

Albany Times Union: “Study: Hospital Costs Vary Widely Nationwide, Capital Region in Middle”

NPR’s Marketplace: “The Cost of Healthcare is Based on Where You Live”

Area of study 
Health