The Effect of Medicare Advantage on Hospital Admissions and Mortality

Christopher C. Afendulis, Michael E. Chernew and Daniel P. Kessler

No 19101, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Medicare currently allows beneficiaries to choose between a government-run health plan and a privately- administered program known as Medicare Advantage (MA). Because enrollment in MA is optional, conventional observational estimates of the program's impact are potentially subject to selection bias. To address this, 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' rates of hospitalization and mortality.

JEL-codes: I1 I13 I18 (search for similar items in EconPapers)
Date: 2013-06
New Economics Papers: this item is included in nep-dem and nep-hea
Note: EH LE
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Citations: View citations in EconPapers (8)

Published as 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, vol 3(2), pages 254-279.

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