title: Is there a Medicaid penalty? The effect of hospitals' Medicaid population on their private payer market share.
abstract: This study examines whether privately insured patients avoid hospitals with large Medicaid populations. I use a conditional logit model of hospital choice to determine whether the size of a hospital's Medicaid population affects the probability that a privately insured patient will choose that hospital. I focus on the metropolitan area of Tampa, Florida, in the years 1994-1996. I control for hospital fixed effects, hospital-specific time trends, patients' driving time to the hospital, and interactions between patient and hospital characteristics. I also instrument for the Medicaid population using the predicted Medicaid population. The results show that privately insured patients are less likely to choose a hospital if it served a larger number of Medicaid patients who were admitted through the emergency department in the previous 6 months. The effect persists over time-an additional 6-month lag cuts the effect in half. Capacity constraints do not seem to be the reason for the effect. I show that the Medicaid effect size could have a moderate effect on the profits of some hospitals. Although limited in scope, this study suggests that hospitals may experience a negative effect on their private revenues when they admit a large population of Medicaid patients.
authors.affiliation: Fox School of Management, Temple University, Philadelphia, USA.
authors.forename: Andrew
authors.initials: A
authors.lastname: Sfekas
mesh_terms: D004469:Economics, Hospital / Q000706:statistics & numerical data*; D005260:Female; D006801:Humans; D007348:Insurance, Health / Q000191:economics / Q000706:statistics & numerical data; D008297:Male; D008484:Medicaid / Q000191:economics / Q000706:statistics & numerical data*; D008875:Middle Aged; D017149:Private Sector / Q000191:economics / Q000706:statistics & numerical data; D014481:United States