Working Paper: NBER ID: w19503
Authors: Jeffrey Clemens; Joshua D. Gottlieb
Abstract: We demonstrate Medicare's influence on private insurers' payments for physicians' services. Using a large administrative change in payments for surgical versus medical care, we find that private prices follow Medicare's lead. A $1 change in Medicare's fees moved private prices by $1.16. A second set of Medicare payment changes, which generated area-specific reimbursement shocks, had a similar effect on private sector prices. Medicare's influence is strongest in areas with concentrated insurers, small physician groups, and competitive physician markets. The public sector's influences on system-wide resource allocation and costs extend well beyond the share of health expenditures it finances directly.
Keywords: Medicare; Private Payments; Physician Services; Health Care Pricing
JEL Codes: H44; H51; H57; I11; I13; L98
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Medicare's fees (I18) | private payments (H49) |
| Medicare's payments (H51) | private sector pricing (D49) |
| Medicare's influence (I18) | private sector responses (L39) |
| across-the-board Medicare payment changes (I18) | private payments (H49) |
| Medicare's payments (H51) | system-wide resource allocation and costs (H60) |