The Private Provision of Public Services: Evidence from Random Assignment in Medicaid

Danil Agafiev Macambira, Michael Geruso, Anthony Lollo, Chima D. Ndumele and Jacob Wallace

No 30390, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines the effects of privatizing social health insurance. We exploit a natural experiment in Medicaid, wherein nearly 100,000 enrollees were randomly assigned between a publicly-operated fee-for-service system and private managed care. Managed care reduced costs by 5.6% via cost-effective substitutions within prescription drugs and via lower prices for outpatient services. We present evidence that pharmacy utilization management was the key mechanism reducing overuse and encouraging substitution to lower-cost drugs without decreasing quality. In contrast, privatizing medical benefits led to only modest savings and was associated with decreased healthcare quality and consumer satisfaction.

JEL-codes: H4 I11 (search for similar items in EconPapers)
Date: 2022-08
New Economics Papers: this item is included in nep-hea
Note: EH PE
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.nber.org/papers/w30390.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:30390

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w30390

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().