The Persistence of Medicare Advantage Spillovers in the Post-Affordable Care Act Era

24 Pages Posted: 20 Nov 2017

See all articles by Yevgeniy Feyman

Yevgeniy Feyman

Harvard University - T.H. Chan School of Public Health

Austin Frakt

Government of the United States of America - Department of Veterans Affairs (VA); Boston University - School of Medicine; Boston University - School of Public Health

Date Written: November 16, 2017

Abstract

Spillovers can arise in markets with multiple purchasers relying on shared producers. If producers are constrained in their ability to adjust quality and cost across purchasers, then the influence of a dominant purchaser affects the entire market. Prior studies have found such spillovers in health care, from managed care to non-managed care populations — reducing spending, utilization, and improving outcomes. Similar effects have been identified in the Medicare Advantage market as well, with studies finding declines in utilization and reductions in resource use among the Traditional Medicare population associated with increases in county-level Medicare Advantage penetration. However, no study to date has provided plausibly causal estimates of such spillovers in the post-Affordable Care Act era. Our study does so by exploiting idiosyncratic differences in payments to Medicare Advantage plans that are unrelated to traditional Medicare spending. Further controlling for health status and other potential confounders, we estimate that a one percentage point increase in county-level Medicare Advantage penetration results in a $146 (1.7%) reduction in standardized per enrollee Traditional Medicare spending. We find evidence for reductions in utilization both on the intensive and extensive margins (including reductions in the number of inpatient stays) and across many types of health care services, not all of which have been analyzed in prior Medicare Advantage spillover studies. Our results suggest that spillovers from Medicare Advantage to Traditional Medicare have persisted in the post-Affordable Care Act era.

Keywords: medicare advantage, spillovers, managed care, health care reform

JEL Classification: I10, I13, I18

Suggested Citation

Feyman, Yevgeniy and Frakt, Austin, The Persistence of Medicare Advantage Spillovers in the Post-Affordable Care Act Era (November 16, 2017). Available at SSRN: https://ssrn.com/abstract=3072604 or http://dx.doi.org/10.2139/ssrn.3072604

Yevgeniy Feyman (Contact Author)

Harvard University - T.H. Chan School of Public Health ( email )

677 Huntington Ave
Boston, MA MA 02115
United States

Austin Frakt

Government of the United States of America - Department of Veterans Affairs (VA)

150 S. Huntington Ave (152H)
Boston, MA 02130
United States

Boston University - School of Medicine ( email )

Boston, MA 02118
United States

Boston University - School of Public Health ( email )

150 S. Huntington Ave (152H)
Boston, MA 02130
United States

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