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Does service-level spending show evidence of selection across health plan types?

Shenyi Jiang, Randall Ellis and Tzu-chun Kuo
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Tzu-chun Kuo: DxCG, Inc.

No wp2007-43, Boston University - Department of Economics - Working Papers Series from Boston University - Department of Economics

Abstract: The paper examines whether patterns of service level spending in capitated managed care plans differ from those in traditional non-managed care health plans. We apply the service selection model of Ellis and McGuire (2007) to recent, highly disaggregated commercial insurance data from Medstat MarketScan. Rankings of services by selection incentives give largely the same rankings as the EM results for Medicare. We next calculate selection indices separately for four types of health plans: non-managed care comprehensive, preferred provider organization (PPO) plans, managed care point of service (POS) and health maintenance organization (HMO) plans. Our results imply high correlations and similar rankings of selection indices across plan types. We then test whether services predicted to be underprovided indeed have less than average rates of spending by managed care plans, while non-managed care plans have above average rates of spending. Stronger evidence of selection distortions among the four plan types is found when decomposing spending by type of service and provider specialty than by place of service.

Keywords: Health plans; Adverse selection; Managed care (search for similar items in EconPapers)
JEL-codes: C21 D12 I11 (search for similar items in EconPapers)
Pages: 26
Date: 2007-12
New Economics Papers: this item is included in nep-hea and nep-ias
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Citations: View citations in EconPapers (5)

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