NCPA - National Center for Policy Analysis

Expanding Eligibility Leads To More Hospitalizations

April 13, 2000

One of the benefits commonly claimed for expanded public health insurance -- such as Medicaid and the S-CHIP program for low-income children -- is improved efficiency of medical care delivery, but this claim has little rigorous empirical support, say researchers.

Economists at the Massachusetts Institute of Technology assessed the impact of the Medicaid expansions over the 1983-1996 period on the incidence of avoidable hospitalizations -- where access to a physician's care might have prevented the need for hospital treatment.

  • They found that expanded public insurance eligibility led to a significant decline in avoidable hospitalization: over this period expansions of Medicaid eligibility were associated with a 22 percent decline in avoidable hospitalization.
  • But they also found that there is a countervailing and larger impact in terms of increased access to hospital care for newly eligible children, so that there is an overall 10 percent rise in child hospitalizations due to the expansions.

The expansions have mixed implications for treatment intensity, say researchers, but appear to be associated with a significant shift in the types of hospitals at which children are treated, with fewer children treated in public hospitals and more in for-profit facilities.

Source: Leemore Dafny and Jonathan Gruber, "Does Public Insurance Improve the Efficiency of Medical Care? Medicaid Expansions and Child Hospitalizations," NBER Working Paper No. W7555, February 2000, National Bureau of Economic Research.


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