Long‐term Effects of Managed Care

Managed care (MC) plans have been introduced to curb the ever increasing health care costs. Many previous studies on effectiveness lacked a long-term perspective; hence, the sustainability of (possible) savings remains unclear. Moreover, because of their incentives, MC plans are susceptible to under-provision of care. Most of these possibly negative effects can only be observed in the long-term. This paper analyzes the long-term effects of MC plans on cost savings, mortality, and the use of service, using administrative data from a large Swiss health insurer. The identification is based on a propensity-score matching approach, where individuals who enter an MC plan are compared over 10 years to individuals who remain in a standard fee-for-service plan. Cost savings are substantial and sustainable, and the mortality rate is lower in MC plans. Cost savings are driven by fewer consultations and fewer days in hospital care, although the probability of visiting a provider at least once per year is similar or even higher for persons in MC plans.