Dan Polsky, PhD, MPP
Professor, Health Care Management and Medicine
A new National Bureau of Economic Research (NBER) working paper by Afendulis, Chernew, and Kessler says yes. If this working paper holds up to peer review, these findings will offer an important endorsement of the Medicare Advantage program. The paper attributes large and striking reductions in all hospitalizations (22%), hospitalizations for ambulatory sensitive conditions (18%), and mortality (15%) to Medicare Advantage as illustrated in the graph below. The authors argue that their results provide evidence that private Medicare Advantage plans are more efficient than traditional Medicare. But, I will provide an alternative explanation and an important caution after reviewing their approach.
What is clever about the paper is that they have devised an analytical method that successfully avoids the criticism that better outcomes among Medicare Advantage beneficiaries could be attributed to healthier enrollees.