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Health Care Spending and Utilization in Public and Private Medicare

Author

Listed:
  • Vilsa Curto
  • Liran Einav
  • Amy Finkelstein
  • Jonathan Levin
  • Jay Bhattacharya

Abstract

We compare health care spending in public and private Medicare using newly available claims data from Medicare Advantage (MA) insurers. MA insurer revenues are 30 percent higher than their health care spending. Adjusting for enrollee mix, health care spending per enrollee in MA is 9 to 30 percent lower than in Traditional Medicare (TM), depending on the way we define "comparable" enrollees. Spending differences primarily reflect differences in health care utilization, with similar reductions for "high-value" and "low-value" care, rather than health care prices. We present evidence consistent with MA plans encouraging substitution to less expensive care and engaging in utilization management.

Suggested Citation

  • Vilsa Curto & Liran Einav & Amy Finkelstein & Jonathan Levin & Jay Bhattacharya, 2019. "Health Care Spending and Utilization in Public and Private Medicare," American Economic Journal: Applied Economics, American Economic Association, vol. 11(2), pages 302-332, April.
    • Handle: RePEc:aea:aejapp:v:11:y:2019:i:2:p:302-32
    Note: DOI: 10.1257/app.20170295
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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