Managed Care and the Safety Net. More Pain for the Uninsured?
- Presenter:
Chair: Joel Hay; Discussant: TBA Tue June 6, 2006 8:00-9:30 Room 213
Author: Núria Mas, IESE Business School
Title: Managed Care and the Safety Net. More Pain for the Uninsured?
Rationale: Health care insurance in the US has changed enormously in the last 20 years, since managed care radically altered incentives to providers. The impact of the managed care boom has been subject to close scrutiny. However, most of the literature has concentrated either in the role of managed care in bringing efficiency gains to the health care market or on studying its effect on utilization and quality of care for its enrollees. Research analyzing the impact of managed care on the uninsured and on safety net hospitals has been minimal.
Objectives: This paper contributes to fill this gap and analyses the impact of managed care on access to care and quality of care for the uninsured.
Methodology: The United States has always relied on an institutional safety net to meet the basic health care needs of the uninsured. Traditionally, hospitals in the US had been able to finance charity care through a complex system of cross-subsidies where privately insured patients were charged higher prices. By imposing stricter financial restrictions to hospitals and doctors, managed care reduced prices charged to their insured patients, making it very difficult for hospitals to obtain excess funds for their uncompensated care. In this paper we test the hypothesis that this increased financial pressure has worsened both access to care and quality of care for the uninsured, by affecting the safety net hospitals. We expand Frank and Salkever’s (1991) model to analyze hospitals’ decisions to provide charity care and use a probit model to test the results empirically. We use hospital data from the American Hospital Association and patient data from the Office of Statewide Healthcare Planning and Development (OSHPD). Managed care data is obtained from the Area Resource File.
Results: First, using US data, our results show that manage care has increased safety net hospital closures and it has encouraged the termination of those services (ER, obstetrics, etc) most frequently used by the uninsured, hence negatively affecting their access to care. Second, our results confirm that uninsured patients shift toward government hospitals. The results also seem to point toward the possibility of a trade-off between the number of charity care patients and the quality of care provided. Finally, we directly analyze the impact of managed care on health outcomes for the uninsured (as measured by the probability of dying after a heart attack). Our results indicate that managed care penetration has a negative impact on the health of charity care patients and also of those that go to government hospitals.
Conclusions: the results of this paper confirm that the impact of managed care goes beyond its effect on its enrollees and on efficiency. They also have important policy implications since the gap between socioeconomic groups could widen if the uninsured not only see their access to care reduced, but also go to hospitals which quality is declining.
