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Medicare Payments and System-Level Health-Care Use: The Spillover Effects of Medicare Managed Care

Author

Listed:
  • Katherine Baicker

    (Harvard School of Public Health)

  • Jacob A. Robbins

    (Brown University)

Abstract

The rapid growth of Medicare managed care over the past decade has the potential to increase the efficiency of health-care delivery. Improvements in care management for some may improve efficiency system-wide, with implications for optimal payment policy in public insurance programs. These system-level effects may depend on local health-care market structure and vary based on patient characteristics. We use exogenous variation in the Medicare payment schedule to isolate the effects of market-level managed care enrollment on the quantity and quality of care delivered. We find that in areas with greater enrollment of Medicare beneficiaries in managed care, the non–managed care beneficiaries have fewer days in the hospital but more outpatient visits, consistent with a substitution of less expensive outpatient care for more expensive inpatient care, particularly at high levels of managed care. We find no evidence that care is of lower quality. Optimal payment policies for Medicare managed care enrollees that account for system-level spillovers may thus be higher than those that do not.

Suggested Citation

  • Katherine Baicker & Jacob A. Robbins, 2015. "Medicare Payments and System-Level Health-Care Use: The Spillover Effects of Medicare Managed Care," American Journal of Health Economics, University of Chicago Press, vol. 1(4), pages 399-431, Fall.
  • Handle: RePEc:ucp:amjhec:v:1:y:2015:i:4:p:399-431
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    Citations

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    Cited by:

    1. Elizabeth L. Munnich & Michael R. Richards, 2020. "Treatment flows after outsourcing public insurance provision: Evidence from Florida Medicaid," Health Economics, John Wiley & Sons, Ltd., vol. 29(11), pages 1343-1363, November.
    2. 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).
    3. Liran Einav & Amy Finkelstein & Yunan Ji & Neale Mahoney, 2020. "Randomized trial shows healthcare payment reform has equal-sized spillover effects on patients not targeted by reform," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 117(32), pages 18939-18947, August.
    4. Christopher C. Afendulis & Michael E. Chernew & Daniel P. Kessler, 2017. "The Effect of Medicare Advantage on Hospital Admissions and Mortality," American Journal of Health Economics, MIT Press, vol. 3(2), pages 254-279, Spring.
    5. Yevgeniy Feyman & Steven D. Pizer & Austin B. Frakt, 2021. "The persistence of medicare advantage spillovers in the post‐Affordable Care Act era," Health Economics, John Wiley & Sons, Ltd., vol. 30(2), pages 311-327, February.
    6. Lee R. Mobley & Pedro Amaral & Tzy-Mey Kuo & Mei Zhou & Srimoyee Bose, 2017. "Medicare modernization and diffusion of endoscopy in FFS medicare," Health Economics Review, Springer, vol. 7(1), pages 1-9, December.

    More about this item

    Keywords

    American; health; health economics; health policy; incentives; health behaviors; health care; insurance coverage; Medicaid;
    All these keywords.

    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I15 - Health, Education, and Welfare - - Health - - - Health and Economic Development
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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