Medicaid managed care and cost containment in the adult disabled population

Despite the increasing enrollment of adult disabled beneficiaries into Medicaid managed care organizations (MCOs), there is little evidence of its (hoped for) effectiveness at reducing Medicaid expenditures.

: To evaluate the impact of Medicaid MCOs on health care expenditures for adults with disabilities.

I employ a repeated observations design comparing individual monthly Medicaid expenditures across beneficiaries who reside in counties with mandatory, voluntary, and no MCOs. County-level Medicaid MCO program status for adults with disabilities was merged with the Medical Expenditure Panel Survey and the Area Resource File for 1996-2004. Two-part regression models are used to estimate the probability and level of Medicaid expenditure.

Working age Medicaid beneficiaries who receive Supplement Security Income for disability comprise the sample of 1613 individuals.

Outcome measures include total and service-specific Medicaid expenditures.

On average, total monthly Medicaid expenditures per beneficiary do not differ between FFS and MCO counties although some service-specific spending differs. Relative to FFS counties, average monthly Medicaid spending per beneficiary is higher for prescription medications in voluntary ($24) and mandatory ($25) MCO counties. Average Medicaid monthly spending for other medical care and dental care is $4 to $11 higher per beneficiary in MCO relative to FFS counties.

Medicaid MCO programs as implemented are not associated with lower Medicaid spending; thus, state Medicaid programs should consider additional policy tools to contain health care expenditures in this population.