1999

The Association between For-Profit Hospital Ownership and Increased Medicare Spending

New England Journal of Medicine
Elaine M. Silverman, M.D., M.P.H., Jonathan S. Skinner, Ph.D., and Elliott S. Fisher, M.D., M.P.H.

The rate of conversion to for-profit ownership of hospitals has recently increased in the United States, with uncertain implications for health care costs. We compared total per capita Medicare spending in areas served by for-profit and not-for-profit hospitals. We used American Hospital Association data to categorize U.S. hospital service areas as for-profit (meaning that all beds in the area were in for-profit hospitals), not-for-profit (all beds were in not-for-profit hospitals), or mixed in 1989, 1992, and 1995. We then used data from the Continuous Medicare History Sample to calculate the 1989, 1992, and 1995 spending rates in each area, adjusting for other characteristics known to influence spending: age, sex, race, region of the United States, percentage of population living in urban areas, Medicare mortality rate, number of hospitals, number of physicians per capita, percentage of beds in hospitals affiliated with medical schools, percentage of beds in hospitals belonging to hospital chains, and percentage of Medicare beneficiaries enrolled in health maintenance organizations.

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Medicare Reform: Who Pays and Who Benefits?

Health Affairs
McClellan M., and Skinner J.S.

As Medicare's share of federal spending and gross domestic product (GDP) rises, the program may have increasingly important consequences not only for the health of Americans but also for their net income and financial well-being. We use incidence analysis to study payments and benefits in Medicare to various generations and income groups. We find that Medicare actually provides larger net dollar transfers to wealthier beneficiaries, although the “insurance value” of these dollars is greater for low-income households. We then evaluate a range of proposed Medicare reforms with regard to their impact on the distribution of both health care and disposable income.

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