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Common Practice: Spillovers from Medicare on Private Health Care

Author

Listed:
  • Michael L. Barnett
  • Andrew Olenski
  • Adam Sacarny

Abstract

Efforts to raise US health-care productivity have proceeded slowly, potentially due to the fragmentation of payment across insurers. Each insurer's efforts to improve care could influence how doctors practice for other insurers, leading to unvalued externalities. We study a randomized letter intervention by Medicare to curtail overuse of antipsychotics. The letters did not mention private insurance but reduced prescribing to these patients by 12 percent, much like the 17 percent effect in Medicare. We cannot reject one-for-one spillovers, suggesting that physicians use similar medical practice styles across insurers. Our findings establish that insurers can affect health care well outside their direct purview.

Suggested Citation

  • Michael L. Barnett & Andrew Olenski & Adam Sacarny, 2023. "Common Practice: Spillovers from Medicare on Private Health Care," American Economic Journal: Economic Policy, American Economic Association, vol. 15(3), pages 65-88, August.
    • Handle: RePEc:aea:aejpol:v:15:y:2023:i:3:p:65-88
    DOI: 10.1257/pol.20200553
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    Cited by:

    1. is not listed on IDEAS
    2. Lee, Ajin, 2025. "How does medicaid managed care affect provider behavior? New evidence from spillovers on private health care," Journal of Public Economics, Elsevier, vol. 248(C).
    3. Geruso, Michael & Richards, Michael R., 2022. "Trading spaces: Medicare's regulatory spillovers on treatment setting for non-Medicare patients," Journal of Health Economics, Elsevier, vol. 84(C).

    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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