Changes in individual risk factors related to behavior rather than medical technology have played only a limited role. These findings are confirmed by our analysis of medical claims and outcomes measures for Medicare beneficiaries suffering a heart attack. Using data on everyone in the Medicare population with a heart attack between 1984 and 1991, as well as heart attack records from a major teaching hospital between 1983 and 1995, we find that increasing costs of heart attack care are due almost entirely to increasing intensity of medi- cal treatments. Reimbursement for a given type of therapy has been essentially unchanged. All regressions include five year-age dummy variables and region dummy variables.
Standard errors are in parentheses.
Significant at 10 percent. The implication of these results is that essentially all of the difference between managed care and traditional insurance is on the prices paid for medical care, not the amount of medical care received. Although this result is clear in our data, we want to be cautious on sev- eral grounds. First, the data are from only one state, and managed care is likely to differ across the country. Second, heart attacks probably involve less discretion in the choice of treatment than other diseases such as de- pression or common outpatient care.