A Leak in the Lifeboat: The effect of Medicaid managed care on the vitality of safety-net hospitals

States are increasingly adopting Medicaid managed care in efforts to address budgetary concerns. The intent is that by releasing Medicaid oversight to private organizations, competition will drive down healthcare expenditures so that savings may be passed to the state. Yet there are concerns that th...

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Bibliographic Details
Published inJournal of regulatory economics Vol. 50; no. 3; pp. 251 - 270
Main Author Woodworth, Lindsey
Format Journal Article
LanguageEnglish
Published New York Springer US 01.12.2016
Springer Nature B.V
Subjects
Cost control
Economic models
Economic statistics
Economic theory
Economics
Economics and Finance
Florida
Health care policy
Health economics
Hospital systems
Hospitals
Indigent care
Industrial Organization
Managed care
Medicaid
Microeconomics
Original Article
Patient Protection & Affordable Care Act 2010-US
Pilot projects
Public Finance
Reforms
Reimbursement
Safety management
Trends
United States
Florida
United States > US
I1
Safety-net hospitals
Medicaid
Managed care
H7
managed care
safety-net hospitals
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Summary:States are increasingly adopting Medicaid managed care in efforts to address budgetary concerns. The intent is that by releasing Medicaid oversight to private organizations, competition will drive down healthcare expenditures so that savings may be passed to the state. Yet there are concerns that this competitive solution to cost savings might compromise safety-net hospitals. Managed care organizations cut costs by restricting the providers that enrollees are allowed to see. If movement in Medicaid patients disrupts safety-net hospitals’ casemix, this could affect their ability to cross-subsidize care. This study estimates the impact of Medicaid managed care on safety-net hospitals by exploiting a Florida pilot program that required Medicaid recipients in five counties to enroll in managed care. The results suggest this mandate led to a small reduction in safety-net hospitals’ average ratio of payment-to-cost. There is also some evidence that the effect on safety-net hospitals was disproportionate. This disproportionality was such that hospitals nearest the margin were pushed the furthest towards the edge.
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ISSN:0922-680X
1573-0468
DOI:10.1007/s11149-016-9312-8