Abstract
We study the dynamics of fiscal costs following the outsourcing of Medicaid provision to private health insurers by states. We focus on beneficiaries with disabilities who account for a third of Medicaid's spending. Using a national administrative database, we identify county-level private plan enrollment mandates and exploit them as an instrument for individuals’ transition to managed care plans. These transitions, while initially slightly reducing fiscal costs, lead to a continuous increase in Medicaid's costs over subsequent years. Counties subject to mandates experience a 9.8 % higher cost 4 years post-mandate compared to those without mandates. “Actuarially sound" endogenous payment rates, that are based on past costs in the market, may serve as a mechanism underlying the rising spending.
Original language | English |
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Article number | 105417 |
Journal | Journal of Public Economics |
Volume | 247 |
DOIs | |
State | Published - Jul 2025 |
Keywords
- Disabled
- Medicaid
- Medicaid managed care
- Outsourcing
All Science Journal Classification (ASJC) codes
- Finance
- Economics and Econometrics