The Welfare Impact of Medicare Hmos

Posted: 13 Jan 2004

See all articles by Robert J. Town

Robert J. Town

University of Pennsylvania - The Wharton School; National Bureau of Economic Research (NBER)

Su Liu

Mathematica Policy Research, Inc.

Abstract

We estimate the welfare associated with the Medicare HMO program, now known as Medicare+Choice (M+C). We find that the creation of the M+C program resulted in approximately $15.6 billion in consumer surplus and $52 billion in profits from 1993 to 2000 (in 2000 dollars). This program most likely generated significant net social welfare. However, we find that consumer surplus is geographically unevenly distributed. Prescription drug coverage accounts for approximately 45% of the estimated consumer surplus for 2000. Consumer surplus increases in the number of plans in a county, and most of the increase in welfare is due to increased premium competition.

Suggested Citation

Town, Robert J. and Liu, Su, The Welfare Impact of Medicare Hmos. RAND Journal of Economics, Vol. 34, No. 4, Winter 2003. Available at SSRN: https://ssrn.com/abstract=463787

Robert J. Town (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Su Liu

Mathematica Policy Research, Inc. ( email )

600 Maryland Ave., SW, Suite 550
Washington, DC 20024

Register to save articles to
your library

Register

Paper statistics

Abstract Views
971
PlumX Metrics