Urban-rural differences in Medicare physician expenditures

Abstract

Policymakers have long been concerned with urban-rural disparities in access to health care. These disparities may be particularly severe in the case of the elderly and others covered by Medicare. Descriptive tables show that the total volume of physician services provided to rural beneficiaries is more than 40% lower than the volume of physician services provided to urban beneficiaries. This result is fairly consistent across all types of care and sites of care. In our econometric analysis, we investigate the factors that may explain these differences in utilization. The results indicate that, with prices held constant, variations in demographic and economic characteristics are not the major reasons for the urban-rural gap. Differences in hospital and physician (particularly specialist) availability appear to be the main factors.