The Spillover Effects of Medicare Managed Care: Medicare Advantage and Hospital Utilization

41 Pages Posted: 25 May 2013

See all articles by Katherine Baicker

Katherine Baicker

Harvard University - Department of Health Policy & Management; National Bureau of Economic Research (NBER)

Michael Chernew

Harvard University - Department of Health Care Policy; National Bureau of Economic Research (NBER)

Jacob Robbins

Harvard University - Department of Health Policy & Management

Date Written: May 2013

Abstract

More than a quarter of Medicare beneficiaries are enrolled in Medicare Advantage, which was created in large part to improve the efficiency of health care delivery by promoting competition among private managed care plans. This paper explores the spillover effects of the Medicare Advantage program on the traditional Medicare program and other patients, taking advantage of changes in Medicare Advantage payment policy to isolate exogenous increases in Medicare Advantage enrollment and trace out the effects of greater managed care penetration on hospital utilization and spending throughout the health care system. We find that when more seniors enroll in Medicare managed care, hospital costs decline for all seniors and for commercially insured younger populations. Greater managed care penetration is not associated with fewer hospitalizations, but is associated with lower costs and shorter stays per hospitalization. These spillovers are substantial - offsetting more than 10% of increased payments to Medicare Advantage plans.

Suggested Citation

Baicker, Katherine and Chernew, Michael E. and Robbins, Jacob, The Spillover Effects of Medicare Managed Care: Medicare Advantage and Hospital Utilization (May 2013). NBER Working Paper No. w19070, Available at SSRN: https://ssrn.com/abstract=2269523

Katherine Baicker (Contact Author)

Harvard University - Department of Health Policy & Management ( email )

677 Huntington Avenue
Boston, MA 02115
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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Michael E. Chernew

Harvard University - Department of Health Care Policy ( email )

25 Shattuck Street
Boston, MA 02115
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jacob Robbins

Harvard University - Department of Health Policy & Management ( email )

677 Huntington Avenue
Boston, MA 02115
United States

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