Managed Care and the Growth of Medical Expenditures

52 Pages Posted: 25 Jul 2000 Last revised: 23 Jun 2012

See all articles by David M. Cutler

David M. Cutler

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); Harvard University - Harvard Kennedy School (HKS)

Louise Sheiner

Federal Reserve Board - Division of Research and Statistics; National Bureau of Economic Research (NBER)

Date Written: August 1997

Abstract

We use data across states to examine the relation between HMO enrollment and medical spending. We find that increased managed care enrollment significantly reduces hospital cost growth. While some of this effect is offset by increased spending on physicians, we generally find a significant reduction in total spending as well. In analyzing the sources of hospital cost reductions, we find preliminary evidence that managed care has reduced the diffusion of medical technologies. States with high managed care enrollment were technology leaders in the early 1980s; by the early 1990s those states were only average in their acquisition of new technologies. This finding suggests managed care may have a significant effect on the long-run growth of medical spending.

Suggested Citation

Cutler, David M. and Sheiner, Louise, Managed Care and the Growth of Medical Expenditures (August 1997). NBER Working Paper No. w6140. Available at SSRN: https://ssrn.com/abstract=225903

David M. Cutler (Contact Author)

Harvard University - Department of Economics ( email )

Littauer Center, Room 315A
Cambridge, MA 02138
United States
617-496-5216 (Phone)
617-495-8570 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States
617-868-3900 (Phone)
617-868-2742 (Fax)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Louise Sheiner

Federal Reserve Board - Division of Research and Statistics ( email )

Washington, DC 20551
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
39
Abstract Views
1,283
PlumX Metrics