Common Practice: Spillovers from Medicare on Private Health Care

Michael L. Barnett, Andrew Olenski and Adam Sacarny

American Economic Journal: Economic Policy, 2023, vol. 15, issue 3, 65-88

Abstract: Efforts to raise US health-care productivity have proceeded slowly, potentially due to the fragmentation of payment across insurers. Each insurer's efforts to improve care could influence how doctors practice for other insurers, leading to unvalued externalities. We study a randomized letter intervention by Medicare to curtail overuse of antipsychotics. The letters did not mention private insurance but reduced prescribing to these patients by 12 percent, much like the 17 percent effect in Medicare. We cannot reject one-for-one spillovers, suggesting that physicians use similar medical practice styles across insurers. Our findings establish that insurers can affect health care well outside their direct purview.

JEL-codes: D24 G22 I11 I13 I18 (search for similar items in EconPapers)
Date: 2023
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Working Paper: Common Practice: Spillovers from Medicare on Private Health Care (2020)
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DOI: 10.1257/pol.20200553

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