Health Care Management Papers

Document Type

Journal Article

Date of this Version

1-2011

Publication Source

The B.E. Journal of Economic Analysis & Policy

Volume

11

Issue

2

Start Page

1

Last Page

30

DOI

10.2202/1935-1682.2719

Abstract

We evaluate the impact of the Medicare HMO program and prescription drug coverage on elderly mortality using data from 1993 to 2000. We specify a model of plan entry and benefit choice and Medicare enrollee plan choice and health outcomes. We derive an estimator that is consistent with endogenous plan selection by using the quasi-experimental variation caused by peculiarities of the Medicare reimbursement system for HMOs. We find that, relative to traditional Medicare, enrollment in an HMO without drug coverage increases mortality while enrollment in an HMO with drug coverage has no significant impact. The economic value of the reduction in mortality from drug coverage far outweighs the costs. HMOs, those without drug coverage in particular, attract healthier enrollees than average.

Comments

At the time of publication, author Robert J. Town was affiliated with the University of Minnesota. Currently, (s)he is a faculty member at the Wharton School at the University of Pennsylvania

Keywords

healthcare, HMO, drug coverage

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Date Posted: 27 November 2017