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Managed Care as a Public Cost-Containment Mechanism


  • Dana P. Goldman


This article identifies the impact of managed-care reforms on the utilization of medical services within the military health-services system. The data come from a recent demonstration project that substituted an HMO and PPO for traditional FFS arrangements. Results from a semiparametric model indicate that the generosity of benefits in the HMO increased demand for ambulatory services. Unlike private-sector experience with managed care, aggressive utilization review did not significantly curtail inpatient stays. These results vitiate the presumed effectiveness of reform strategies that rely on large, geographically diffused managed-care networks to contain public-sector health costs.

Suggested Citation

  • Dana P. Goldman, 1995. "Managed Care as a Public Cost-Containment Mechanism," RAND Journal of Economics, The RAND Corporation, vol. 26(2), pages 277-295, Summer.
  • Handle: RePEc:rje:randje:v:26:y:1995:i:summer:p:277-295

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    Cited by:

    1. Kim, Kyoo il, 2006. "Sample selection models with a common dummy endogenous regressor in simultaneous equations: A simple two-step estimation," Economics Letters, Elsevier, vol. 91(2), pages 280-286, May.
    2. Sebastian Gechert, 2010. "Supplementary Private Health Insurance in Selected Countries: Lessons for EU Governments?," CESifo Economic Studies, CESifo, vol. 56(3), pages 444-464, September.
    3. Holmes, George M., 2005. "Increasing physician supply in medically underserved areas," Labour Economics, Elsevier, vol. 12(5), pages 697-725, October.
    4. Bhattacharya, Jayanta & Goldman, Dana & Sood, Neeraj, 2003. "The link between public and private insurance and HIV-related mortality," Journal of Health Economics, Elsevier, vol. 22(6), pages 1105-1122, November.
    5. Thomas J. Miceli & Dennis Heffley, 2002. "Do Hmos Encourage Prevention? An Analysis Of Alternative Health Care Plans," Contemporary Economic Policy, Western Economic Association International, vol. 20(4), pages 429-439, October.
    6. Munkin, Murat K. & Trivedi, Pravin K., 2003. "Bayesian analysis of a self-selection model with multiple outcomes using simulation-based estimation: an application to the demand for healthcare," Journal of Econometrics, Elsevier, vol. 114(2), pages 197-220, June.
    7. Michelle M. Mello & Sally C. Stearns & Edward C. Norton, 2002. "Do Medicare HMOs still reduce health services use after controlling for selection bias?," Health Economics, John Wiley & Sons, Ltd., vol. 11(4), pages 323-340.
    8. Partha Deb & Pravin K. Trivedi, 2009. "Provider networks and primary-care signups: do they restrict the use of medical services?," Health Economics, John Wiley & Sons, Ltd., vol. 18(12), pages 1361-1380.
    9. Carol Rapaport & Christopher A. Trenholm, 2000. "What do we really know about trends in outpatient medical expenditures for children, 1977-1987?," Staff Reports 97, Federal Reserve Bank of New York.
    10. Donna B. Gilleskie & Koleman S. Strumpf, 2005. "The Behavioral Dynamics of Youth Smoking," Journal of Human Resources, University of Wisconsin Press, vol. 40(4), pages 822-866.
    11. Murat K. Munkin & Partha Deb & Pravin K. Trivedi, 2006. "Bayesian analysis of the two-part model with endogeneity: application to health care expenditure," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(7), pages 1081-1099.
    12. Chad D. Meyerhoefer & Yuriy Pylypchuk, 2008. "Does Participation in the Food Stamp Program Increase the Prevalence of Obesity and Health Care Spending?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(2), pages 287-305.
    13. Yang, Zhou & Bishai, David & Harman, Jeffrey, 2008. "Convergence of body mass with aging: The longitudinal interrelationship of health, weight, and survival," Economics & Human Biology, Elsevier, vol. 6(3), pages 469-481, December.
    14. Walter M. Cadette, 1999. "Rethinking Health Care Policy: The Case for Retargeting Tax Subsidies," Macroeconomics 9902011, EconWPA.
    15. Silvia Balia & Andrew M. Jones, 2007. "Unravelling the influence of smoking initiation and cessation on premature mortality using a common latent factor model," Health, Econometrics and Data Group (HEDG) Working Papers 07/06, HEDG, c/o Department of Economics, University of York.

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