KDI 한국개발연구원 - 경제정책정보 - 국내외연구자료 주제 - 금융재정 - 재정·조세 -

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Private vs. Public Provision of Social Insurance: Evidence from Medicaid

NBER 2019.07.29
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Public health insurance benefits in the U.S. are increasingly provided by private firms, despite mixed evidence on welfare effects. We investigate the impact of privatization in Medicaid by exploiting the staggered introduction of county-level mandates in Texas that required disabled beneficiaries to switch from public to private plans. Compared to the public program, which used blunt rationing to control costs, we find privatization led to improvements in healthcare―including increased consumption of high-value drug treatments and fewer avoidable hospitalizations―but also higher Medicaid spending. We conclude that private provision can be beneficial when constraints in the public setting limit efficiency.

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