Enfranchisement and rationing: effects of Medicare on discretionary hospital use

This study examines the effects of Medicare on hospital output using an economic model in which market demand for hospital care is treated as the sum of demands in separable markets. Results indicate that Medicare affected utilization patterns by the elderly, but in terms of an increased level of admissions and increased lengths of stay, not in terms of case mix or (apparently) in the level of the nondiscretionary component of care. However, the results also show the Medicare resulted in rationing of hospital services to patients under 65 years of age: case-specific lengths of stay declined, and there appears to have been a distinct decline in the degree of discretionary hospital use by this patient group.