Responding to Financial Pressures - The Effect of Managed Care on Hospitals' Provision of Charity Care
24 Pages Posted: 21 Apr 2009 Last revised: 24 Apr 2009
Date Written: February 2, 2009
Abstract
The United States relies on charitable medical care to serve the uninsured, most of which is offered by hospitals that act as providers of last resort and that constitute the safety net. Traditionally, these hospitals have been able to finance their provision of unfunded care through a complex system of cross-subsidies. The objective of this paper is to analyze the effects that financial pressures have on the provision of charity care by hospitals. To do so we look at the effect of price pressures and at the cost-controlling mechanisms imposed by managed care. Our hypothesis is that price competition and other forms of financial pressures undermine hospitals' ability to cross-subsidize and so challenges their survival. Our results show that managed care has a disproportionately negative effect on the closure of safety net hospitals. Moreover, amongst those that remain open, in areas where managed care penetration increases the most, safety net hospitals react by closing the health services most commonly used by the uninsured (emergency rooms, obstetrics, and alcohol and drug treatments).
Keywords: medical, uninsured, hospitals, safety, net
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Hmos and Fee-for-Service Health Care Expenditures: Evidence from Medicare
-
By Tom Getzen
-
The Aggregate Effects of Health Insurance: Evidence from the Introduction of Medicare
-
What Did Medicare Do (and Was it Worth it)?
By Amy Finkelstein and Robin Mcknight
-
Managed Care and Health Care Expenditures: Evidence from Medicare
-
The Effect of Medicare Part D on Pharmaceutical Prices and Utilization
By Mark Duggan and Fiona M. Scott Morton
-
Does Contracting Out Increase the Efficiency of Government Programs? Evidence from Medicaid Hmos
By Mark Duggan
-
Do Investors Forecast Fat Firms? Evidence from the Gold Mining Industry
By Severin Borenstein and Joseph Farrell
-
Hospitals, Managed Care, and the Charity Caseload in California
By Janet Currie and John Fahr