TY  - JOUR
AU  - Duggan,Mark
TI  - Does Contracting Out Increase the Efficiency of Government Programs? Evidence from Medicaid HMOs
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9091
PY  - 2002
Y2  - August 2002
UR  - http://www.nber.org/papers/w9091
L1  - http://www.nber.org/papers/w9091.pdf
N1  - Author contact info:
Mark Duggan
The Wharton School
University of Pennsylvania
1452 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104
Tel: 215-898-0928
Fax: 215-898-7635
E-Mail: mduggan@wharton.upenn.edu
AB  - State governments contract with health maintenance organizations (HMOs) to coordinate medical care for nearly 20 million Medicaid recipients. Identifying the causal effect of HMO enrollment on government spending and health care quality is difficult if, as is often the case, recipients have the option to enroll in a plan.  To estimate the average effect of HMO enrollment, this paper exploits county-level mandates introduced during the last several years in the state of California that required most Medicaid recipients to enroll in a managed care plan.  The empirical results demonstrate that the resulting switch from fee-for-service to managed care was associated with a substantial increase in government spending but no observable improvement in health outcomes, thus apparently reducing the efficiency of this large government program.  The findings cast doubt on the hypothesis that HMO contracting has reduced the strain on government budgets.
ER  -