NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Prices and Productivity in Managed Care Insurance

David M. Cutler, Mark McClellan, Joseph P. Newhouse

NBER Working Paper No. 6677
Issued in August 1998
NBER Program(s):   HC

Integrating the health services and insurance industries (HMOs) could lower expenditure by reducing either the quantity of services or unit price. We compare the treatment of heart attacks and newly diagnosed chest pain in HMOs and traditional plans in two data sets. The nature of these health problems should minimize selection, and OLS and instrumental-variable estimates yield consistent results. HMOs have 30 to 40 percent lower expenditures than traditional indemnity plans. Actual treatments and health outcomes differ little; virtually all the difference in spending comes from lower unit prices. Managed care may yield substantial productivity improvements relative to traditional insurance.

download in pdf format
   (1493 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

This paper is available as PDF (1493 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w6677

Published: David M. Cutler, Mark McClellan, and Joseph P. Newhouse. “How Does Managed Care Do It?” RAND Journal of Economics 31, 3 (Autumn 2000): 526-548.

Users who downloaded this paper also downloaded these:
McClellan and Staiger Comparing Hospital Quality at For-Profit and Not- for-Profit Hospitals
Dafny, Duggan, and Ramanarayanan w15434 Paying a Premium on Your Premium? Consolidation in the U.S. Health Insurance Industry
Cutler and Zeckhauser w7176 The Anatomy of Health Insurance
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us