How does medicaid managed care affect provider behavior? New evidence from spillovers on private health care

Abstract

Medicaid is increasingly provided by private managed care plans. I examine the direct effect of Medicaid privatization on health care utilization of Medicaid beneficiaries as well as the indirect effect on non-Medicaid privately insured individuals. Exploiting the staggered rollout of the Medicaid managed care (MMC) mandate across counties in New York, I find evidence of quality improvements under MMC, such as increased routine office visits and child immunizations. MMC also expanded Medicaid beneficiaries’ access to physicians by increasing the number of providers treating Medicaid patients. I find that routine office visits similarly increased for non-Medicaid privately insured individuals, and the same-signed spillover effect is larger in low-income areas. My findings suggest that physicians may have updated their overall practice styles when the mandate affected a large share of their patients.