Private vs. Public Provision of Social Insurance: Evidence from Medicaid

Timothy Layton, Nicole Maestas, Daniel Prinz (dprinz@worldbank.org) and Boris Vabson

No 26042, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Public health insurance benefits in the U.S. are increasingly provided by private firms, despite mixed evidence on welfare effects. We investigate the impact of privatization in Medicaid by exploiting the staggered introduction of county-level mandates in Texas that required disabled beneficiaries to switch from public to private plans. Compared to the public program, which used blunt rationing to control costs, we find privatization led to improvements in healthcare—including increased consumption of high-value drug treatments and fewer avoidable hospitalizations—but also higher Medicaid spending. We conclude that private provision can be beneficial when constraints in the public setting limit efficiency.

JEL-codes: H51 H53 H75 I13 I18 (search for similar items in EconPapers)
Date: 2019-07
New Economics Papers: this item is included in nep-hea, nep-ias and nep-pbe
Note: AG EH
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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