Distributional incidence of medical price inflation

Who bears the burden for the increasing cost of medical care in the United States? This paper investigates the distributional incidence of medical price inflation and its effect on wages. To do so we track individual level health expenditure and employer level insurance plan information in Utah’s All Payers Claims Database (APCD) and merge employee information with Utah’s Payroll tax data. We then use a quality adjusted, within-provider, measure of inflation to describe the distributional incidence of medical price inflation across employees within a firm, households within a firm, and across employers. We find that, unlike consumer markets, inflation is not concentrated in lower income individuals or households. We find mixed evidence that higher income households experience higher price inflation, which implies that single premium, employer sponsored insurance is inherently a regressive transfer.

Work in progress