Managed Care, Drug Benefits and Mortality: An Analysis of the Elderly

Gautam Gowrisankaran, Robert J. Town

NBER Working Paper No. 10204
Issued in January 2004, Revised in July 2006
NBER Program(s):Health Economics, Economics of Aging

We seek to investigate whether managed health care can affect mortality, and if so, through which mechanisms. We estimate the impact of Medicare+Choice (M+C), Medicare's managed care program, on elderly mortality, using a county-level panel from 1993 to 2000. We control for endogenous M+C penetration rates with county fixed effects and instrumental variables. We construct instruments using the identification created by the fact that M+C payment rates are based on 3 to 8 year lagged fee-for-service (FFS) costs in the county. We find that enrollment in managed care without prescription drug coverage significantly increases mortality while enrollment in managed care with drug coverage has no significant impact, both relative to FFS. The impact of managed care penetration on mortality from heart disease appears to follow a similar pattern. The estimates suggest that a 10-percentage point increase in M+C non-drug coverage would cause 51,000 additional deaths among the aged population in 2000.

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Document Object Identifier (DOI): 10.3386/w10204

Published: Gowrisankaran Gautam & Town Robert & Barrette Eric, 2011. "Managed Care, Drug Benefits and Mortality: An Analysis of the Elderly," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(2), pages 1-32, January. citation courtesy of

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