Regional Price Level Estimates for Medical Services in the United States

Medical service prices vary dramatically across U.S. states, often more so than non-medical goods. This paper leverages billions of commercial insurance claims to create detailed, state-level medical price indices, revealing that price levels alone explain about half of the variation in healthcare spending per person. Interestingly, states like Alaska and Wisconsin pay the most, while Alabama and Arkansas are on the opposite end—highlighting market dynamics over cost inputs. The findings offer a powerful lens for understanding regional healthcare cost disparities and their broader economic consequences.