TY  - JOUR
AU  - Cutler,David M.
AU  - McClellan,Mark
AU  - Newhouse,Joseph P.
TI  - Prices and Productivity in Managed Care Insurance
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6677
PY  - 1998
Y2  - August 1998
UR  - http://www.nber.org/papers/w6677
L1  - http://www.nber.org/papers/w6677.pdf
N1  - Author contact info:
David M. Cutler
Department of Economics
Harvard University
1875 Cambridge Street
Cambridge, MA  02138
Tel: 617/496-5216
Fax: 617/496-8951
E-Mail: dcutler@harvard.edu

Mark B. McClellan
Director, Engelberg Center for Health Care Reform
Senior Fellow, Economic Studies
Leonard .D. Schaeffer Director's Chair in
Health Policy ,The Brookings Institution
1775 Massachusetts avenue, N.W.
Washington, DC 20036
Tel: (202) 741-6567
Fax: NA
E-Mail: mmcclellan@brookings.edu

Joseph P. Newhouse
Division of Health Policy  Research and Education
Harvard University
180 Longwood Avenue
Boston, MA  02115-5899
Tel: 617/432-1325
Fax: 617/432-3503
E-Mail: newhouse@hcp.med.harvard.edu
AB  - 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.
ER  -