Zarek Brot (UChicago): Privatizing Government-Sponsored Health Insurance: Medicare Advantage vs. Traditional Medicare
Abstract: We study the consequences of enrollment in private Medicare Advantage (MA) plans. We longitudinally link claims data from public Medicare (FFS), MA, and commercial insurance. We compare those who initially enroll in MA to those who enroll in FFS, just before and after they qualify for Medicare at age 65. MA reduces health care use by 6% in the first year of enrollment relative to FFS, but raises Medicare's fiscal costs by 15% (4% net of additional benefit generosity). Managed care policies matter: HMO plans generate sizable utilization reductions and fiscal savings, while PPO plans generate sizable fiscal costs.
Economics
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