From Amy Finkelstein, Matthew Gentzkow, and Heidi Williams:
We study the drivers of geographic variation in US healthcare utilization, using an empirical strategy that exploits migration of Medicare patients to separate the role of demand and supply factors. Our approach allows us to account for demand differences driven by both observable and unobservable patient characteristics. We find that 40-50 percent of geographic variation in utilization is attributable to patient demand, with the remainder due to supply-side factors. Demand differences do not appear to result from differences in past experiences, and appear to be explained to a significant degree by differences in patient health.