Competition in Imperfect Markets: Does it Help California's Medicaid Mothers?

44 Pages Posted: 26 Apr 2004 Last revised: 1 Jan 2022

See all articles by Anna Aizer

Anna Aizer

Brown University - Department of Economics; National Bureau of Economic Research (NBER)

Janet Currie

Princeton University; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA)

Enrico Moretti

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Date Written: April 2004

Abstract

Poor and uneducated patients may not know what health care is desirable and, if fully insured, have little incentive to minimize the costs of their care. Partly in response to these concerns, most states have moved a substantial portion of their Medicaid caseloads out of traditional competitive fee-for-service (FFS) care, and into mandatory managed care (MMC) plans that severely restrict the choice of provider. We use a unique longitudinal data base of California births in order to examine the impact of this policy on pregnant women and infants. California phased in MMC creating variation in the timing of MMC. We identify the effects of MMC using changes in the regime faced by individual mothers between births. Some counties adopted single-carrier plans, while others adopted regimes with at least two carriers. Hence, we also ask whether competition between at least two carriers improved MMC outcomes. We find that MMC reduced the quality of prenatal care and increased low birth weight, prematurity, and neonatal death. Our results suggest that the competitive FFS system provided better care than the new MMC system, and that requiring the participation of at least two plans did not improve matters.

Suggested Citation

Aizer, Anna and Currie, Janet and Moretti, Enrico, Competition in Imperfect Markets: Does it Help California's Medicaid Mothers? (April 2004). NBER Working Paper No. w10429, Available at SSRN: https://ssrn.com/abstract=529009

Anna Aizer

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States
401-863-3836 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Janet Currie (Contact Author)

Princeton University ( email )

Princeton, NJ 08544-1021
United States
6092587393 (Phone)

HOME PAGE: http://www.princeton.edu/~jcurrie

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Enrico Moretti

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States

HOME PAGE: http://emlab.berkeley.edu/~moretti/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
67
Abstract Views
960
rank
446,771
PlumX Metrics