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Hospital selective contracting without consumer choice: What can we learn from Medi-Cal?

  • Anil Bamezai

    (RAND, Santa Monica, California)

  • Glenn A. Melnick
  • Joyce M. Mann
  • Jack Zwanziger
Registered author(s):

    In the selective contracting era, consumer choice has generally been absent in most state Medicaid programs, including California's (called Medi-Cal). In a setting where beneficiary exit is not a threat, a large payer may have both the incentives and the ability to exercise undue market power, potentially exposing an already vulnerable population to further harm. The analyses presented here of Medi-Cal contracting data, however, do not yield compelling evidence in favor of the undue market power hypothesis. Instead, hospital competition appears to explain with greater consistency why certain hospitals choose to contract with Medi-Cal while others do not, the trends in inpatient prices paid by Medi-Cal over time, and the effect of price competition on service cutbacks, such as emergency room closures. © 2003 by the Association for Public Policy Analysis and Management.

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    File URL: http://hdl.handle.net/10.1002/pam.10096
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    Article provided by John Wiley & Sons, Ltd. in its journal Journal of Policy Analysis and Management.

    Volume (Year): 22 (2003)
    Issue (Month): 1 ()
    Pages: 65-84

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    Handle: RePEc:wly:jpamgt:v:22:y:2003:i:1:p:65-84
    Contact details of provider: Web page: http://www3.interscience.wiley.com/journal/34787/home

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    1. Brooks, John M. & Dor, Avi & Wong, Herbert S., 1997. "Hospital-insurer bargaining: An empirical investigation of appendectomy pricing," Journal of Health Economics, Elsevier, vol. 16(4), pages 417-434, August.
    2. Robinson, James C. & Luft, Harold S., 1985. "The impact of hospital market structure on patient volume, average length of stay, and the cost of care," Journal of Health Economics, Elsevier, vol. 4(4), pages 333-356, December.
    3. Adamache, Killard W. & Sloan, Frank A., 1983. "Competition between non-profit and for-profit health insurers," Journal of Health Economics, Elsevier, vol. 2(3), pages 225-243, December.
    4. Staten, Michael & Dunkelberg, William & Umbeck, John, 1987. "Market share and the illusion of power : Can blue cross force hospitals to discount?," Journal of Health Economics, Elsevier, vol. 6(1), pages 43-58, March.
    5. Pauly, Mark V., 1987. "Monopsony power in health insurance: thinking straight while standing on your head," Journal of Health Economics, Elsevier, vol. 6(1), pages 73-81, March.
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