In the Shadow of a Giant: Medicare's Influence on Private Physician Payments

94 Pages Posted: 5 Oct 2013

See all articles by Jeffrey P. Clemens

Jeffrey P. Clemens

University of California, San Diego (UCSD) - Department of Economics; NBER

Joshua D. Gottlieb

University of Chicago; National Bureau of Economic Research (NBER)

Date Written: October 2013

Abstract

We demonstrate Medicare's influence on private insurers' payments for physicians' services. Using a large administrative change in payments for surgical versus medical care, we find that private prices follow Medicare's lead. A $1 change in Medicare's fees moved private prices by $1.16. A second set of Medicare payment changes, which generated area-specific reimbursement shocks, had a similar effect on private sector prices. Medicare's influence is strongest in areas with concentrated insurers, small physician groups, and competitive physician markets. The public sector's influences on system-wide resource allocation and costs extend well beyond the share of health expenditures it finances directly.

Suggested Citation

Clemens, Jeffrey P. and Gottlieb, Joshua D., In the Shadow of a Giant: Medicare's Influence on Private Physician Payments (October 2013). NBER Working Paper No. w19503, Available at SSRN: https://ssrn.com/abstract=2336368

Jeffrey P. Clemens

University of California, San Diego (UCSD) - Department of Economics ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States

HOME PAGE: http://econweb.ucsd.edu/~j1clemens/

NBER ( email )

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Joshua D. Gottlieb

University of Chicago ( email )

1307 E. 60th St.
Chicago, IL 60637
United States

HOME PAGE: http://www.gottlieb.ca/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://papers.nber.org/authors/joshua_gottlieb

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