AEI Health Policy Outlook: Lessons for Medicare from Private Health Insurers

Thought you might be interested in the latest AEI Health Policy Outlook on geographic variations in efficient health care use and spending by AEI visiting scholars Darius Lakdawalla and Tomas Philipson.

A large body of evidence suggests that Medicare currently does not deploy health care resources efficiently. In this new study, Lakdawalla, Philipson and their coauthor Dana Goldman compare Medicare and private-sector health insurers spending and use. They find that variations in service use across regions are smaller for the private sector than for Medicare, suggesting better management in the private sector.

Among the key points of this Outlook:

  • The authors' research upends conventional wisdom, and the Dartmouth Atlas project in particular. Dartmouth researchers used Medicare data to document considerable variation in health care use and spending across the United States, but found little corresponding difference in health outcomes. Simply put, they concluded that more care is not better care, and that those receiving a greater number of services could actually be harmed. This line of reasoning led many to conclude (incorrectly per Lakdawalla, Philipson and Goldman) that to lower costs and fix what ails the health care system, high-use areas like Miami ought to model themselves after low-use areas like Minneapolis.

  • The authors find that Medicare seems more likely than private insurers to attempt to restrain spending by holding down prices for care rather than by managing health care resources.

  • Lakdawalla, Philipson and Goldman conclude that Medicare should look to the private sector for a model, and that instead of holding down prices, a more efficient use of resources in Medicare could help reduce geographic variation, limit costs, and improve health care outcomes.

The AEI Health Policy Outlook is available here: http://www.aei.org/outlook/100975.

Darius Lakdawalla and Tomas Philipson are available for interview and can be contacted at [email protected] and [email protected]. For additional media inquiries, please contact Veronique Rodman at [email protected] (202.862.4871) or Sara Huneke at [email protected] (202.862.4870).

###

Also Visit
AEIdeas Blog The American Magazine

What's new on AEI

Study: Piketty tax plan would boost equality by making rich less rich. But poor would be poorer, too
image Rep. McCaul’s cybersecurity information sharing center: If you build it, will they come?
image Halbig and its aftermath
image Culture of how Washington pays for medical care
AEI on Facebook
Events Calendar
  • 28
    MON
  • 29
    TUE
  • 30
    WED
  • 31
    THU
  • 01
    FRI
Tuesday, July 29, 2014 | 10:00 a.m. – 12:00 p.m.
Is Medicare's future secure? The 2014 Trustees Report

Please join AEI as the chief actuary for Medicare summarizes the report’s results, followed by a panel discussion of what those spending trends are likely to mean for seniors, taxpayers, the health industry, and federal policy.

Event Registration is Closed
Friday, August 01, 2014 | 10:30 a.m. – 12:00 p.m.
Watergate revisited: The reforms and the reality, 40 years later

Please join us as four of Washington’s most distinguished political observers will revisit the Watergate hearings and discuss reforms that followed.

No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.