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Hospitals, managed care, and the charity caseload in California


  • Currie, Janet
  • Fahr, John


Many observers have blamed HMOs for increasing financial pressures on private hospitals and causing them to cut back on the provision of charity care. We examine this issue using data on all hospital discharges in California between 1988 and 1996. We find that public hospitals in counties with higher HMO penetration do take on a larger share of the county's charity caseload. However, these public hospitals also take on larger shares of most other types of patients. At the hospital level, we find little evidence that either for-profit or non-profit private hospitals respond to HMO penetration by turning away uninsured and Medicaid patients. On the contrary, in the for-profit sector higher HMO penetration is linked to reductions in the share of privately insured patients in the caseload, and corresponding increases in the share of Medicare patients and Medicaid births. Since HMO penetration reduces the price paid by privately insured patients they may be less attractive to for-profit hospitals relative to the publicly insured.
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  • Currie, Janet & Fahr, John, 2004. "Hospitals, managed care, and the charity caseload in California," Journal of Health Economics, Elsevier, vol. 23(3), pages 421-442, May.
  • Handle: RePEc:eee:jhecon:v:23:y:2004:i:3:p:421-442

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    References listed on IDEAS

    1. Laurence C. Baker, 1995. "HMOs and Fee-For-Service Health Care Expenditures: Evidence from Medicare," NBER Working Papers 5360, National Bureau of Economic Research, Inc.
    2. Jason Barro & David M. Cutler, 2000. "Consolidation in the Medical Care Marketplace,A Case Study from Massachusetts," NBER Chapters,in: Mergers and Productivity, pages 9-50 National Bureau of Economic Research, Inc.
    3. Hilary Williamson Hoynes, 2000. "Local Labor Markets And Welfare Spells: Do Demand Conditions Matter?," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 351-368, August.
    4. Thorpe, Kenneth E & Phelps, Charles E, 1991. "The Social Role of Not-for-Profit Organizations: Hospital Provision of Charity Care," Economic Inquiry, Western Economic Association International, vol. 29(3), pages 472-484, July.
    5. Noether, Monica, 1988. "Competition among hospitals," Journal of Health Economics, Elsevier, vol. 7(3), pages 259-284, September.
    6. Mark G. Duggan, 2000. "Hospital Ownership and Public Medical Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 115(4), pages 1343-1373.
    7. Edward C. Norton & Douglas O. Staiger, 1994. "How Hospital Ownership Affects Access to Care for the Uninsured," RAND Journal of Economics, The RAND Corporation, vol. 25(1), pages 171-185, Spring.
    8. Richard G. Frank & David S. Salkever, 1991. "The Supply of Charity Services by Nonprofit Hospitals: Motives and Market Structure," RAND Journal of Economics, The RAND Corporation, vol. 22(3), pages 430-445, Autumn.
    9. 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.
    10. David M. Cutler & Louise Sheiner, 1998. "Managed Care and the Growth of Medical Expenditures," NBER Chapters,in: Frontiers in Health Policy Research, Volume 1, pages 77-116 National Bureau of Economic Research, Inc.
    11. David M. Cutler & Jonathan Gruber, 1996. "Does Public Insurance Crowd out Private Insurance?," The Quarterly Journal of Economics, Oxford University Press, vol. 111(2), pages 391-430.
    12. Pauly, Mark V, 1987. "Nonprofit Firms in Medical Markets," American Economic Review, American Economic Association, vol. 77(2), pages 257-262, May.
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    Cited by:

    1. Núria Mas, 2013. "Responding to financial pressures. The effect of managed care on hospitals’ provision of charity care," International Journal of Health Economics and Management, Springer, vol. 13(2), pages 95-114, June.
    2. Currie, Janet & Fahr, John, 2005. "Medicaid managed care: effects on children's Medicaid coverage and utilization," Journal of Public Economics, Elsevier, vol. 89(1), pages 85-108, January.
    3. Daysal, N. Meltem, 2012. "Does uninsurance affect the health outcomes of the insured? Evidence from heart attack patients in California," Journal of Health Economics, Elsevier, vol. 31(4), pages 545-563.
    4. Baldauf, Markus & Santos Silva, J.M.C., 2012. "On the use of robust regression in econometrics," Economics Letters, Elsevier, vol. 114(1), pages 124-127.
    5. Janet Currie & Mehdi Farsi & Bentley MacLeod, 2004. "Cut to the Bone? Hospital Takeovers and Nurse Employment Contracts," Working Papers 864, Princeton University, Department of Economics, Industrial Relations Section..
    6. Janet Currie & Mehdi Farsi & W. Bentley Macleod, 2005. "Cut to the Bone? Hospital Takeovers and Nurse Employment Contracts," ILR Review, Cornell University, ILR School, vol. 58(3), pages 471-493, April.
    7. Thomas Buchmueller & John C. Ham & Lara D. Shore-Sheppard, 2015. "The Medicaid Program," NBER Chapters,in: Economics of Means-Tested Transfer Programs in the United States, volume 1, pages 21-136 National Bureau of Economic Research, Inc.

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    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets


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