Working Paper: NBER ID: w19101
Authors: Christopher C. Afendulis; Michael E. Chernew; Daniel P. Kessler
Abstract: 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.
Keywords: Medicare; Medicare Advantage; Hospital Admissions; Mortality
JEL Codes: I1; I13; I18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| MA enrollment (I18) | reduction in hospitalization rates (I14) |
| MA enrollment (I18) | reduction in admissions for ambulatory care-sensitive conditions (I14) |
| MA enrollment (I18) | reduction in mortality rates (I14) |
| MA payment rules discontinuity (C69) | MA enrollment (I18) |