DOES MANAGED CARE REDUCE PREVENTABLE HOSPITALIZATIONS IN THE MEDICARE POPULATION? THE IMPACT OF MEDICARE ADVANTAGE ON AMBULATORY CARE SENSITIVE HOSPITAL ADMISSIONS AND USE OF PREVENTIVE SERVICES

Abstract

One controversial option to control growth in the rate of federal spending on health care is to transform Medicare into a "voucher" program for beneficiaries to purchase health insurance from managed care plans in the private market. Approximately one-quarter of Medicare beneficiaries are currently enrolled in a private health plan through Medicare Advantage, which has higher average costs than the traditional fee-for-service program but potentially reduces costly and unnecessary medical services by increasing the use of preventive care. Using a nationally representative sample of Medicare beneficiaries from the Medical Expenditure Panel Survey (MEPS) from 2006 to 2010, I compared the prevalence of potentially avoidable hospital admissions and use of preventive services for beneficiaries in Medicare Advantage to beneficiaries in the traditional fee-for-service program. Using propensity score estimation to control for observable bias, I found no relationship between enrollment in Medicare Advantage and potentially avoidable hospital admissions, and a significant but small positive relationship with use of select preventive services. Considered together, these findings suggest that Medicare Advantage may not achieve better health outcomes for beneficiaries than the traditional fee-for-service program. These findings have implications for policy discussions surrounding the future expansion of private managed care plans in the Medicare program.