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The Effect of Medicare Advantage on Hospital Admissions and Mortality

Author

Listed:
  • Christopher C. Afendulis
  • Michael E. Chernew
  • Daniel P. Kessler

Abstract

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.

Suggested Citation

  • Christopher C. Afendulis & Michael E. Chernew & Daniel P. Kessler, 2013. "The Effect of Medicare Advantage on Hospital Admissions and Mortality," NBER Working Papers 19101, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19101
    Note: HC HE LE
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    References listed on IDEAS

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    1. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, January.
    2. 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.
    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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    Cited by:

    1. Amanda Starc & Robert J. Town, 2015. "Externalities and Benefit Design in Health Insurance," NBER Working Papers 21783, National Bureau of Economic Research, Inc.
    2. Duggan, Mark & Starc, Amanda & Vabson, Boris, 2016. "Who benefits when the government pays more? Pass-through in the Medicare Advantage program," Journal of Public Economics, Elsevier, vol. 141(C), pages 50-67.
    3. 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, MIT Press, vol. 1(4), pages 399-431, Fall.
    4. Mark Duggan & Jonathan Gruber & Boris Vabson, 2015. "The Efficiency Consequences of Health Care Privatization: Evidence from Medicare Advantage Exits," NBER Working Papers 21650, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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