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The Effect of Medicare Advantage on Hospital Admissions and Mortality

  • Christopher C. Afendulis
  • Michael E. Chernew
  • Daniel P. Kessler
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    Medicare currently allows beneficiaries to choose between a government-run health plan and a privately- administered program known as Medicare Advantage (MA). Because enrollment in MA is optional, conventional observational estimates of the program's impact are potentially subject to selection bias. To address this, we use a discontinuity in the rules governing MA payments to health plans that gives greater payments to plans operating in counties in Metropolitan Statistical Areas with populations of 250,000 or more. The sharp difference in payment rates at this population cutoff creates a greater incentive for plans to increase the generosity of benefits and therefore enroll more beneficiaries in MA in counties just above versus just below the cutoff. We find that the expansion of MA on this margin reduces beneficiaries' rates of hospitalization and mortality.

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    File URL: http://www.nber.org/papers/w19101.pdf
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    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19101.

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    Date of creation: Jun 2013
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    Handle: RePEc:nbr:nberwo:19101
    Note: HC HE LE
    Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
    Phone: 617-868-3900
    Web page: http://www.nber.org
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    1. Anna Aizer & Janet Currie & Enrico Moretti, 2007. "Does Managed Care Hurt Health? Evidence from Medicaid Mothers," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 385-399, August.
    2. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, June.
    3. Bryan Dowd & Matthew L. Maciejewski & Heidi O'Connor & Gerald Riley & Yisong Geng, 2011. "Health plan enrollment and mortality in the Medicare program," Health Economics, John Wiley & Sons, Ltd., vol. 20(6), pages 645-659, June.
    4. Duggan, Mark, 2004. "Does contracting out increase the efficiency of government programs? Evidence from Medicaid HMOs," Journal of Public Economics, Elsevier, vol. 88(12), pages 2549-2572, December.
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