Payer type and the returns to bypass surgery: evidence from hospital entry behavior.
In this paper, we estimate the returns associated with the provision of coronary artery bypass graft (CABG) surgery, by payer type (Medicare, HMO, etc.). Because reliable measures of prices and treatment costs are often unobserved, we seek to infer returns from hospital entry behavior. We estimate a model of patient flows for CABG patients that provides inputs for an entry model. We find that FFS provides a high return throughout the study period. Medicare, which had been generous in the early 1980s, now provides a return that is close to zero. Medicaid appears to reimburse less than average variable costs. HMOs essentially pay at average variable costs, though the return varies inversely with competition.
Chernew
Michael
M
Department of Health Management and Policy, University of Michigan and NBER, Ann Arbor 48109-2029, USA. mchernew@umich.edu
Gowrisankaran
Gautam
G
Fendrick
A Mark
AM
D002140:California; D001026:Coronary Artery Bypass / Q000191:economics* / Q000706:statistics & numerical data*; D003659:Decision Making, Organizational; D004469:Economics, Hospital / Q000706:statistics & numerical data*; D018588:Fee-for-Service Plans / Q000191:economics; D006279:Health Maintenance Organizations / Q000191:economics; D006302:Health Services Research; D006801:Humans; D007182:Income / Q000706:statistics & numerical data; D007349:Insurance, Health, Reimbursement / Q000145:classification* / Q000191:economics; D007350:Insurance, Hospitalization / Q000191:economics; D008389:Marketing of Health Services / Q000191:economics; D008484:Medicaid / Q000191:economics; D006278:Medicare / Q000191:economics; D017059:Models, Econometric; D011357:Product Line Management / Q000191:economics; D014481:United States