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The Effect of Medicare Advantage on Hospital Admissions and Mortality

Author

Listed:
  • Christopher C. Afendulis

    (Harvard University)

  • Michael E. Chernew

    (Harvard University and NBER)

  • Daniel P. Kessler

    (Stanford University and NBER)

Abstract

Medicare currently allows beneficiaries to choose between traditional Medicare and privately run plans in the Medicare Advantage (MA) program. Because enrollment in MA is optional, conventional observational estimates of the program's impact are potentially subject to selection bias. To address this issue, we use a discontinuity in the rules governing MA payments to health plans that gives greater payments to plans operating in counties in metropolitan statistical areas with populations of 250,000 or more. The sharp difference in payment rates at this population cutoff creates a greater incentive for plans to increase the generosity of benefits and therefore enroll more beneficiaries in MA in counties just above versus just below the cutoff. We find that the expansion of MA on this margin reduces beneficiaries’ hospital use and mortality.

Suggested Citation

  • Christopher C. Afendulis & Michael E. Chernew & Daniel P. Kessler, 2017. "The Effect of Medicare Advantage on Hospital Admissions and Mortality," American Journal of Health Economics, MIT Press, vol. 3(2), pages 254-279, Spring.
    • Handle: RePEc:tpr:amjhec:v:3:y:2017:i:2:p:254-279
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    References listed on IDEAS

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    8. Baicker, Katherine & Chernew, Michael E. & Robbins, Jacob A., 2013. "The spillover effects of Medicare managed care: Medicare Advantage and hospital utilization," Journal of Health Economics, Elsevier, vol. 32(6), pages 1289-1300.
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    Cited by:

    1. Yevgeniy Feyman & Steven D. Pizer & Austin B. Frakt, 2021. "The persistence of medicare advantage spillovers in the post‐Affordable Care Act era," Health Economics, John Wiley & Sons, Ltd., vol. 30(2), pages 311-327, February.
    2. Baker, Laurence C. & Bundorf, M. Kate & Kessler, Daniel P., 2020. "The effects of medicare advantage on opioid use," Journal of Health Economics, Elsevier, vol. 70(C).

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    More about this item

    Keywords

    Medicare Advantage; mortality;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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