Home > Publications . Search All . Browse All . Country . Browse PSC Pubs . PSC Report Series

PSC In The News

RSS Feed icon

Former trainee Herbert says residential squatters may be a good thing

Work by Couper, Farley et al. shows impact of racial composition on neighborhood choice

Thompson details killings and shaping of official narrative in 1971 Attica prison uprising

More News

Highlights

Michigan ranked #12 on Business Insider's list of 50 best American colleges

Frey's new report explores how the changing US electorate could shape the next 5 presidential elections, 2016 to 2032

U-M's Data Science Initiative offers expanded consulting services via CSCAR

Elizabeth Bruch promoted to Associate Professor

Next Brown Bag

PSC Brown Bags
will resume fall 2016

Lauren Nicholas photo

Does Managed Care Reduce Federal Spending? Evidence from Medicare

Publication Abstract

Download PDF versionNicholas, Lauren. 2009. "Does Managed Care Reduce Federal Spending? Evidence from Medicare." PSC Research Report No. 09-671. February 2009.

Although Medicare Managed Care (MMC) was introduced as a way to reduce costs, the effect of the program on total Medicare spending is unknown. Current literature has focused on three conflicting sets of findings including spillover effects from managed care which reduce total Medicare spending and positive selection into managed care and overpayments to managed care plans relative to Fee-for-Service (FFS) spending, which increase spending. This research reconciles these results by examining the effects of Medicare managed care penetration on total county-level Medicare spending for elderly beneficiaries from 1999 - 2004. Using an instrumental variables approach, I find that a one percentage point increase in Medicare managed care penetration increases total county Medicare spending by 1.1 percent, $2.6 billion in 2004 dollars. There is no evidence of cost-reducing spillovers from MMC penetration to FFS. Increases in FFS spending likely caused by positive selection into MMC account for 40 percent of the increase in costs, the remainder is built in by federal payment policy to MMC plans.

Country of focus: United States of America.

Browse | Search : All Pubs | Next