Long-term effects of managed care

Managed care (MC) plans have been introduced to curb the ever increasing health care costs. Many previous studies on effectiveness lacked a long-term perspective, hence the sustainability of (possible) savings remains unclear. Moreover, due to their incentives MC plans are susceptible to under-provision of care. Most of these possibly negative effects can only be observed in the long-term. This paper analyzes the long-term effects of MC plans on cost savings, mortality and the use of service, using administrative data from the largest Swiss health insurer. The identification is based on a propensity-score matching approach, where individuals that enter a MC plan are compared over ten years to individuals insured in a standard fee-for-service plan. Unlike in the US literature, the data allows one to observe the type of care people receive in the MC plan although payment is through capitation. Early results show substantial and sustainable cost savings due to a lower number of provider visits and less days in inpatient care. The mortality rate of individuals in MC plans is less than half of those in standard plans.