Managed Care and Medical Expenditures of Medicare Beneficiaries

Michael Chernew, Philip DeCicca, Robert Town. Managed Care and Medical Expenditures of Medicare Beneficiaries. Cambridge, MA: NBER Working Paper #13747, January 2008.
This paper investigates the impact of Medicare HMO penetration on the medical care expenditures incurred by Medicare fee-for-service enrollees. We find that increasing penetration leads to reduced health care spending on fee-for-service beneficiaries. In particular, a one percentage point increase in Medicare HMO penetration reduces such spending by .9 percent. We estimate similar models for various measures of health care utilization and find penetration-induced reductions, consistent with our spending estimates. Finally, we present evidence that suggests our estimated spending reductions are driven by beneficiaries who have at least one chronic condition. Full text (pdf)

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