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Managed Care and the Growth of Medical Expenditures

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Author Info
David M. Cutler
Louise Sheiner

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Abstract

We use data across states to examine the relation between HMO enrollment and medical spending. We find that increased managed care enrollment significantly reduces hospital cost growth. While some of this effect is offset by increased spending on physicians, we generally find a significant reduction in total spending as well. In analyzing the sources of hospital cost reductions, we find preliminary evidence that managed care has reduced the diffusion of medical technologies. States with high managed care enrollment were technology leaders in the early 1980s; by the early 1990s those states were only average in their acquisition of new technologies. This finding suggests managed care may have a significant effect on the long-run growth of medical spending.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6140.

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Date of creation: Aug 1997
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Handle: RePEc:nbr:nberwo:6140

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. David M. Cutler & Mark McClellan, 1996. "The Determinants of Technological Change in Heart Attack Treatment," NBER Working Papers 5751, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Newhouse, Joseph P, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer. [Downloadable!] (restricted)
  3. Wholey, Douglas & Feldman, Roger & Christianson, Jon B., 1995. "The effect of market structure on HMO premiums," Journal of Health Economics, Elsevier, vol. 14(1), pages 81-105, May. [Downloadable!] (restricted)
  4. Alan B. Krueger & Helen Levy, 1997. "Accounting for the Slowdown in Employer Health Care Costs," NBER Working Papers 5891, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Janet Currie & Patricia Reagan, 1998. "Distance to Hospitals and Children's Access to Care: Is Being Closer Better, and for Whom?," NBER Working Papers 6836, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Daniel P. Kessler & Mark B. McClellan, 2000. "Medical Liability, Managed Care, and Defensive Medicine," NBER Working Papers 7537, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Farasat A.S. Bokhari, 2001. "Managed Care and the Adoption of Hospital Technology: The Case of Cardiac Catherterization," HEW wp2001_10_02, EconWPA, revised Feb 2006. [Downloadable!]
  4. Laurence C. Baker & Sharmila Shankarkumar, 1997. "Managed Care and Health Care Expenditures: Evidence From Medicare," NBER Working Papers 6187, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. Janet Currie & John Fahr, 2000. "Medicaid Managed Care: Effects on Children's Medicaid Coverage and Utilization," JCPR Working Papers 156, Northwestern University/University of Chicago Joint Center for Poverty Research. [Downloadable!]
    Other versions:
  6. Daron Acemoglu & Amy Finkelstein, 2006. "Input and Technology Choices in Regulated Industries: Evidence From the Health Care Sector," NBER Working Papers 12254, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Robert F. Graboyes, 2000. "Getting better, feeling worse : cure rates, health insurance, and welfare," Working Paper 00-05, Federal Reserve Bank of Richmond. [Downloadable!]
  8. Amy Finkelstein, 2005. "The Aggregate Effects of Health Insurance: Evidence from the Introduction of Medicare," NBER Working Papers 11619, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. David M. Cutler & Louise Sheiner, 1999. "The Geography of Medicare," American Economic Review, American Economic Association, vol. 89(2), pages 228-233, May. [Downloadable!] (restricted)
    Other versions:
  10. Janet Currie & John Fahr, 2001. "Hospitals, Managed Care, and the Charity Caseload in California," NBER Working Papers 8621, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  11. Caroline M. Hoxby, 2002. "School Choice and School Productivity (or Could School Choice be a Tide that Lifts All Boats?)," NBER Working Papers 8873, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  12. Paul A. Heidenreich & Mark McClellan & Craig Frances & Laurence C. Baker, 2001. "The Relation Between Managed Care Market Share and the Treatment of Elderly Fee-For-Service Patients with Myocardial Infarction," NBER Working Papers 8065, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  13. Michael Chernew & Philip DeCicca & Robert Town, 2008. "Managed Care and Medical Expenditures of Medicare Beneficiaries," NBER Working Papers 13747, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. Laurence Baker & Joanne Spetz, 1999. "Managed Care and Medical Technology Growth," NBER Working Papers 6894, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  15. Robert F. Graboyes, 2000. "Medicine worse than the malady : cure rates, population shifts, and health insurance," Working Paper 00-06, Federal Reserve Bank of Richmond. [Downloadable!]
  16. Robert F. Graboyes, 2000. "Our money or your life : indemnities vs. deductibles in health insurance," Working Paper 00-04, Federal Reserve Bank of Richmond. [Downloadable!]
  17. Yu-Chu Shen & Vivian Wu & Glenn Melnick, 2008. "The Changing Effect of HMO Market Structure: An Analysis of Penetration, Concentration, and Ownership Between 1994-2005," NBER Working Papers 13775, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  18. Laurence Baker, 2000. "What Does HMO Market Share Measure? Examining Provider Choice Restrictions," Forum for Health Economics & Policy, Berkeley Electronic Press, vol. 3(1), pages 1018-1018. [Downloadable!] (restricted)
  19. Laurence Baker & Sharmila Shankarkumar, 1998. "Managed Care and Health Care Expenditures: Evidence from Medicare, 1990-1994," Forum for Health Economics & Policy, Berkeley Electronic Press, vol. 1(1), pages 1059-1059. [Downloadable!] (restricted)
  20. Mas, Nuria & Seinfeld, Janice, 2004. "Is managed care restraining the adoption of technology by hospitals?," IESE Research Papers D/554, IESE Business School. [Downloadable!]
  21. Janet Currie & Aaron S. Yelowitz, 1999. "Health Insurance and Less Skilled Workers," JCPR Working Papers 63, Northwestern University/University of Chicago Joint Center for Poverty Research. [Downloadable!]
    Other versions:
  22. Laurence C. Baker & Ciaran S. Phibbs, 2000. "Managed Care, Technology Adoption, and Health Care: The Adoption of Neonatal Intensive Care," NBER Working Papers 7883, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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