Abstract
Spillovers can arise in markets with multiple purchasers relying on shared producers. Prior studies have found such spillovers in health care, from managed care to nonmanaged care populations—reducing spending and utilization, and improving outcomes, including in Medicare. This study provides the first plausibly causal estimates of such spillovers from Medicare Advantage (MA) to Traditional Medicare (TM) in the post‐Affordable Care Act era using an instrumental variables approach. Controlling for health status and other potential confounders, we estimate that a one percentage point increase in county‐level MA penetration results in a $64 (95% CI: $18 to $110) (0.7%) reduction in standardized per‐enrollee TM spending. We find evidence for reductions in utilization both on the intensive and extensive margins, across a number of health care services. Our results complement and extend prior work that found spillovers from MA to TM in earlier years and under different payment policies than are in place today.
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