Abstract: The marginal benefit of health care determines the extent to which policies that change health care consumption affect health. I use variation in access to hospitals caused by nearly 1,300 hospital entries and exits to estimate the marginal benefit of inpatient care. I show that hospital entries and exits cause sharp changes in the quantity of inpatient care, but there is no evidence of an effect on average mortality with tight confidence intervals. I find suggestive evidence of an effect on mortality in rural areas and for the over-65 population with magnitudes that imply the marginal benefit of inpatient care is significantly higher for these populations than for the average patient.
Even for rural areas and the elderly, an effect is not seen until more than a year after the event.
By the way, $900 billion is spent annually at U.S. hospitals.
For the pointer I thank David, a loyal MR reader.