Using 2014-2021 data from the Oregon All Payer All Claims database, we performed a difference-in-differences analysis to test the impact of the hospital payment cap on hospital facility prices for enrollees in Oregon’s state employee plan. We find that the hospital payment cap successfully reduced hospital prices for enrollees in the state employee plan over the first two years.

Medicare Advantage (MA) has grown in popularity but critics believe that insurers are overpaid, partially due to the quartile adjustment system that determines plan benchmarks. However, elimination of the quartile adjustments may lead to less generous benefits and fewer plan offerings, which could slow MA enrollment growth. We find no significant changes in benefits, offerings or enrollment.

To encourage more MA plan offerings, better benefits, and greater enrollment, the Affordable Care Act introduced a quartile-based payment system. We find that the quartile adjustments led to 46.7 billion dollars more in payments to MA plans from 2013-2021 than would have occurred if benchmarks were set at 100% of historical Traditional Medicare spending.

Increases in Medicare Advantage (MA) enrollment coupled with concerns about overpayment to plans have prompted calls for change. Benchmark setting in MA, which determines plan payment, has received relatively little attention as an avenue for reform. We found that unobserved favorable selection in MA led to underpayment to counties with lower MA penetration and overpayment to counties with higher MA penetration.

The Medicare Advantage (MA) program was created to expand beneficiary choice and reduce spending through capitated payment to private insurers. However, many stakeholders now argue that MA is failing to deliver on its promise to reduce spending. We conclude that regulatory approaches to improve risk adjustment and recoup overpayments from risk-score gaming have the highest potential impact and are the most feasible to implement.

The burden of high and rising health care spending falls primarily on U.S. individuals and families. Earlier work found that hospital price regulations in Oregon led to 107.5 million dollars in savings for the state employee plan in the first 27 months of the policy. A key question that remains is whether the savings generated from these payment caps are passed on to enrollees in the state employee plan in the form of lower cost-sharing. We find that the hospital payment cap led to a 9.5 percent reduction in out-of-pocket spending per outpatient procedure and a 2.5 percent increase in the number of outpatient procedures per enrollee per year for the Oregon educators.