The Effect of Any Willing Provider and Freedom of Choice Laws on Health Care Expenditures

Abstract:     
Any Willing Provider and Freedom of Choice laws restrict the ability of managed care entities, including pharmacy benefit managers, to selectively contract with providers. The managed care entities argue this limits their ability to generate cost savings, while proponents of the laws suggest that such selective contracts limit competition, leading to an increase in aggregate costs. We examine the effect of state adoption of such laws on total state healthcare spending, finding that any willing provider/freedom of choice laws are associated with cost increases of at least 3 percent. These results suggest that these laws are harmful from a spending perspective.

Number of Pages in PDF File: 18

Keywords: managed care, pharmacy benefit managers, spending, selective contracting

JEL Classification: I18, K32, L42

working papers series