Table 4.

Effect of Penetration on Log Hospitalization Costs

Dep Var: Log Costs	Full Sample				Traditional Medicare FFS		MA		Commercial
	OLS		IV Payments*Year		OLS	IV Payments* Year	OLS	IV Payments* Year	OLS	IV Payments* Year
MA Managed Care	−0.0027***	−0.00239***	−0.0051**	−0.0047**	−0.0025***	−0.0045**	−0.0029***	−0.00204	−0.0026***	−0.0042**
Penetration	(0.00075)	(0.00066)	(0.00200)	(0.0019)	(0.00060)	(0.0019)	(0.0010)	(0.00263)	(0.00056)	(0.0017)
Risk Adjusters	No	Yes	No	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Covariates	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Hosp FEs	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Year FEs	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Observations	13,678,534	13,678,534	13,678,534	13,678,534	5,813,942	5,813,942	1,253,227	1,253,227	3,632,805	3,632,805
R-squared	0.031	0.1822	0.030	0.182	0.154	0.154	0.190	0.190	0.212	0.212

Note: Costs are in real 2009 dollars. MA Managed Care Penetration is in percentages (ranging from 0 to 100). Individual level covariates are age, sex, race, and type of insurance. Hospital level covariates are teaching hospital status, for-profit status, and number of beds. County level covariates are population size, % in poverty, % unemployed, per capita income, % male, % white, % black, % Hispanic, % pop under 15, % aged 15–19, % aged 20–20, % aged 25–44, % aged 45–64, % aged 65 and older, # of general practitioners per capita, # of specialists per capita, # of surgeons per capita, # of other physicians per capita. Robust standard errors in parentheses (clustered on county).

^***p<0.01,

^**p<0.05,

^*p<0.1.

Data are from Healthcare Cost and Utilization Project’s state inpatient database for NY, MA, AZ, FL, and CA for 1999–2009 (20% sample) and from the Medicare enrollment files for 1998–2009.