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The Welfare Impact of Medicare HMOs

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  • Robert Town
  • Su Liu
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    Abstract

    The authors estimate the social welfare associated with the Medicare+Choice program at approximately $18.7 billion in consumer surplus and $52 billion in HMO profits from 1993 to 2000. Conservatively, the estimated total net social welfare from the M+C program is $24.8 billion. Prescription drug coverage and competition among HMOs play an important role in creating this surplus, even though generating sufficient HMO competition appears to be difficult. The article also notes that although the benefits from the M+C program are large, they are not evenly distributed across the country.

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    File URL: http://mathematica-mpr.com/publications/pdfs/welimphmos.pdf
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    Bibliographic Info

    Paper provided by Mathematica Policy Research in its series Mathematica Policy Research Reports with number 3849.

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    Length: 18
    Date of creation: 30 Dec 2003
    Date of revision:
    Handle: RePEc:mpr:mprres:3849

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    Related research

    Keywords: Welfare Medicare HMOs Welfare Reform;

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    References

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    1. Anne Beeson Royalty & Neil Solomon, 1999. "Health Plan Choice: Price Elasticities in a Managed Competition Setting," Journal of Human Resources, University of Wisconsin Press, vol. 34(1), pages 1-41.
    2. Cardell, N. Scott, 1997. "Variance Components Structures for the Extreme-Value and Logistic Distributions with Application to Models of Heterogeneity," Econometric Theory, Cambridge University Press, vol. 13(02), pages 185-213, April.
    3. Michael Chernew & Gautam Gowrisankaran & Dennis P. Scanlon, 2001. "Learning and the Value of Information: Evidence From Health Plan Report Cards," NBER Working Papers 8589, National Bureau of Economic Research, Inc.
    4. Strombom, Bruce A. & Buchmueller, Thomas C. & Feldstein, Paul J., 2002. "Switching costs, price sensitivity and health plan choice," Journal of Health Economics, Elsevier, vol. 21(1), pages 89-116, January.
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    Citations

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    Cited by:
    1. Martin Gaynor & Robert J. Town, 2011. "Competition in Health Care Markets," NBER Working Papers 17208, National Bureau of Economic Research, Inc.
    2. Martin Gaynor & Kate Ho & Robert Town, 2014. "The Industrial Organization of Health Care Markets," NBER Working Papers 19800, National Bureau of Economic Research, Inc.
    3. Yamamoto, Wataru, 2013. "Negative economic consequences of ethical campaigns?: Market data evidence," MPRA Paper 49070, University Library of Munich, Germany.
    4. Mark Duggan & Amanda Starc & Boris Vabson, 2014. "Who Benefits when the Government Pays More? Pass-Through in the Medicare Advantage Program," NBER Working Papers 19989, National Bureau of Economic Research, Inc.
    5. Song, Zirui & Landrum, Mary Beth & Chernew, Michael E., 2013. "Competitive bidding in Medicare Advantage: Effect of benchmark changes on plan bids," Journal of Health Economics, Elsevier, vol. 32(6), pages 1301-1312.
    6. Glazer, Jacob & McGuire, Thomas G., 2013. "Making Medicare advantage a middle-class program," Journal of Health Economics, Elsevier, vol. 32(2), pages 463-473.

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