NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Effect of Medicare Advantage on Hospital Admissions and Mortality

Christopher C. Afendulis, Michael E. Chernew, Daniel P. Kessler

NBER Working Paper No. 19101
Issued in June 2013
NBER Program(s):   HC   HE   LE

Medicare currently allows beneficiaries to choose between a government-run health plan and a privately- administered program known as Medicare Advantage (MA). Because enrollment in MA is optional, conventional observational estimates of the program's impact are potentially subject to selection bias. To address this, we use a discontinuity in the rules governing MA payments to health plans that gives greater payments to plans operating in counties in Metropolitan Statistical Areas with populations of 250,000 or more. The sharp difference in payment rates at this population cutoff creates a greater incentive for plans to increase the generosity of benefits and therefore enroll more beneficiaries in MA in counties just above versus just below the cutoff. We find that the expansion of MA on this margin reduces beneficiaries' rates of hospitalization and mortality.

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Document Object Identifier (DOI): 10.3386/w19101

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