The impact of the managed care backlash on health care spending

Abstract

AbstractThe health spending slowdown associated with the managed care revolution in the 1990s suggests that managed care may have been successful in controlling health care spending. I exploit the passage of state regulation during the “managed care backlash” as well as geographic variation in managed care intensity to measure the impact of managed care on spending. I find that restricting managed care causes a large and significant increase in hospital spending, which cannot be explained by changes in hospital market concentration, other regulatory activity, and multiple other possible explanations. I also do not find effects of the backlash on mortality.