Understanding Medicaid Managed Care: The Procured Competition Model
This National Bureau of Economic Research working paper by Mark Shepard and Jacob Wallace analyzes the economics of contracting Medicaid services to private managed care insurers. With over 75 million low-income Americans enrolled in Medicaid, more than three-quarters receive care through these private entities. The authors present three central arguments: first, empirical evidence indicates that privatization has neither significantly reduced public costs nor improved care quality. Second, they introduce a conceptual framework termed 'procured competition,' characterizing Medicaid managed care as a hybrid system combining public procurement mechanisms with regulated market competition. Third, the article examines key policy levers involving procurement strategies, competitive dynamics, and consumer choice within this model. The authors emphasize the substantial variation in how individual states design these programs and highlight the limited existing evidence regarding effective practices. Consequently, they identify this field as a promising area for high-impact scholarly research. The paper aims to clarify the structural complexities of Medicaid privatization and guide future economic analysis and policy formulation in health welfare systems.
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Understanding Medicaid Managed Care: The Procured Competition Model
This National Bureau of Economic Research working paper by Mark Shepard and Jacob Wallace analyzes the economics of contracting Medicaid services to private managed care insurers. With over 75 million low-income Americans enrolled in Medicaid, more than three-quarters receive care through these private entities. The authors present three central arguments: first, empirical evidence indicates that privatization has neither significantly reduced public costs nor improved care quality. Second, they introduce a conceptual framework termed 'procured competition,' characterizing Medicaid managed care as a hybrid system combining public procurement mechanisms with regulated market competition. Third, the article examines key policy levers involving procurement strategies, competitive dynamics, and consumer choice within this model. The authors emphasize the substantial variation in how individual states design these programs and highlight the limited existing evidence regarding effective practices. Consequently, they identify this field as a promising area for high-impact scholarly research. The paper aims to clarify the structural complexities of Medicaid privatization and guide future economic analysis and policy formulation in health welfare systems.
National Bureau of Economic Research Working Papers