In the Shadow of a Giant: Medicare's Influence on Private Physician Payments

Jeffrey Clemens and Joshua Gottlieb

No 19503, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We demonstrate Medicare's influence on private insurers' payments for physicians' services. Using a large administrative change in payments for surgical versus medical care, we find that private prices follow Medicare's lead. A $1 change in Medicare's fees moved private prices by $1.16. A second set of Medicare payment changes, which generated area-specific reimbursement shocks, had a similar effect on private sector prices. Medicare's influence is strongest in areas with concentrated insurers, small physician groups, and competitive physician markets. The public sector's influences on system-wide resource allocation and costs extend well beyond the share of health expenditures it finances directly.

JEL-codes: H44 H51 H57 I11 I13 L98 (search for similar items in EconPapers)
Date: 2013-10
New Economics Papers: this item is included in nep-hea and nep-ias
Note: AG EH PE
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Citations: View citations in EconPapers (22)

Published as Jeffrey Clemens & Joshua D. Gottlieb, 2017. "In the Shadow of a Giant: Medicare’s Influence on Private Physician Payments," Journal of Political Economy, University of Chicago Press, vol. 125(1), pages 1-39.

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Journal Article: In the Shadow of a Giant: Medicare’s Influence on Private Physician Payments (2017)
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