Duke 2008 | ASHE | Equity and Efficiency in Health and Healthcare

Managed care has been deployed as a cost containment policy in the Medicaid program for more than thirty years. However, it is only in more recent years that States have extended it to the beneficiaries who incur the lion's share of Medicaid's health care expenditures, adults with disabilities. While their enrollment into managed care grows, there is little evidence of its effectiveness at reducing their health care expenditures relative to the status quo, fee-for-service model of care. Moreover, the characteristics that make beneficiaries with disabilities expensive, their complex, chronic health conditions have led to conflicting expectations about Medicaid managed care's potential to contain spending in this population. In this paper, I offer one attempt to resolve these conflicts. I estimate the average effects of enrollment in voluntary and mandatory Medicaid MCOs on health care expenditures relative to the status quo, fee-for-service (FFS) care, in a nationally representative sample.

A repeated observations design is used to compare individual expenditures across four Medicaid enrollment groups: FFS Only, Mandatory MCO, Voluntary FFS, and Voluntary MCO. The study's data sources are the Medical Expenditure Panel Survey, and a County Medicaid Managed Care Dataset constructed for this study. Study outcomes include total and service-specific individual Medicaid health care expenditures. Two-part regression models are used to estimate average monthly expenditures. I use logit regression to model the probability of any expenditure, total and service-specific. Gamma log generalized linear models are then used to estimate total and service-specific mean monthly expenditures.

Preliminary results indicate that the average monthly Medicaid expenditures for FFS Only enrollees (i.e., FFS enrollment where no MCO plan is available) total roughly $490 per enrollee. On average, MCO enrollment is not associated with a reduction in Medicaid expenditures relative to FFS enrollment. Specifically, mandatory enrollment in a Medicaid MCO is associated with an increase of approximately $128 per month relative to enrollment in FFS Only. There are no differences in average monthly Medicaid expenditures between Voluntary MCO enrollees and the FFS Only group or Voluntary FFS enrollees and the FFS Only group.

Medicaid MCOs may satisfy other important policy aims in the adult disabled population including improved health care expenditure predictability, access, or health outcomes. However, State Medicaid programs should not depend solely on Medicaid MCOs to contain costs in their adult disabled populations.