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Unpublished Paper
In the Shadow of a Giant: Medicare's Influence on Private Payment Systems
NBER Working Paper (2015)
  • Jeffrey Clemens, University of California - San Diego
  • Joshua D. Gottlieb, University of British Columbia
Abstract
We demonstrate Medicare's influence on private insurers' payments for physicians' services. Using a large administrative change in payments for surgical versus medical care, we find that private prices follow Medicare's lead. A $1 change in Medicare's fees moved private prices by $1.16. A second set of Medicare payment changes, which generated area-specific reimbursement shocks, had a similar effect on private sector prices. Medicare's influence is strongest in areas with concentrated insurers, small physician groups, and competitive physician markets. The public sector's influences on system-wide resource allocation and costs extend well beyond the share of health expenditures it finances directly.
Keywords
  • health insurance,
  • Medicare,
  • cost-shifting,
  • cost-following
Publication Date
2015
Citation Information
Jeffrey Clemens and Joshua D. Gottlieb. 2013. "In the Shadow of a Giant: Medicare's Influence on Private Payment Systems" NBER Working Paper No. 19503, October