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NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Working Papers by Boris Vabson

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Working Papers

March 2014Who Benefits when the Government Pays More? Pass-Through in the Medicare Advantage Program
with Mark Duggan, Amanda Starc: w19989
Governments contract with private firms to provide a wide range of services. While a large body of previous work has estimated the effects of that contracting, surprisingly little has investigated how those effects vary with the generosity of the contract. In this paper we examine this issue in the Medicare Advantage (MA) program, through which the federal government contracts with private insurers to coordinate and finance health care for more than 15 million Medicare recipients. To do this, we exploit a substantial policy-induced increase in MA reimbursement in metropolitan areas with a population of 250 thousand or more relative to MSAs just below this threshold. Our results demonstrate that the additional reimbursement leads more private firms to enter this market and to an increase in...

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