Oliver Burkhard: The Effect of Managed Care Models on Health Care Expenditure

Adviser: Prof. Dr. Marloes Maathuis

Co-Adviser: Dr. Markus Kalisch

July 2011

Abstract:

In this thesis we want to estimate the cost reduction effects by managed care plans that were introduced in Swiss health insurance in 1996. Those plans limit the free choice of health care provider and come with reduced premiums. The data comes from one insurer and the years 1997-2000.

The challenge we face comes from the unobserved health of the insured. It can have an influence on both the choice of managed care plan and on the costs caused. We tackle the problem by generating an estimate of an auxiliary variable "latent health'" using Tobit regression which allows us to estimate the causal effect of managed care plans on costs using a Two Part model. We then look at different possibilities to improve the results.

We find that  the total effect of managed care consists of a part that can be explained through the auxiliary variable and a part that cannot, indicating true cost reduction effects by the managed care models.