Stress Testing Cardiac Care Markets through Deregulation

Daniel R. Arnold, Michael R. Richards, Yashaswini Singh and Christopher Whaley

No 35645, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The diffusion of technological innovation depends on incentives, regulations, and firms’ strategic behaviors. We study these intersections within cardiac procedure markets following Medicare’s expansion of non-hospital facility options for treatment, enabled by clinical advancements. State-level regulations restrain federal pro-competition policy. Where market entry occurs, business stealing is concentrated among the lowest cost treatment settings, rather than high-cost hospitals––increasing Medicare spending by approximately $2.5 million. Medicare policy also generates externalities for untargeted procedures and other payers, except when hospitals and physicians are vertically integrated. Federal rulemaking interacts with and is mitigated by complex market dynamics––including in potentially unanticipated ways.

JEL-codes: H44 H51 H75 I11 I18 (search for similar items in EconPapers)
Date: 2026-08
New Economics Papers: this item is included in nep-com, nep-hea and nep-mac
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