Gautam Gowrisankaran, PhD
Assistant Professor of Economics, John M. Olin School of Business at Washington University in St. Louis
Faculty Research Fellow at the National Bureau of Economic Research in Cambridge, Massachusetts

Managed Care, Drug Benefits and Mortality:
An Analysis of the Elderly

December 8, 2006
12:00 - 1:30 PM

Colonial Penn Center Auditorium

Abstract Paper

Gautam Gowrisankaran is an Assistant Professor of Economics at the John M. Olin School of Business at Washington University in St. Louis and a Faculty Research Fellow at the National Bureau of Economic Research in Cambridge, Massachusetts. Born in Montreal, Canada in 1971, he received his B.A. from Swarthmore College in 1991 and his Ph.D. in Economics from Yale University in 1995, where his dissertation analyzed merger models. Since then, his research has focused on industrial organization, health economics and applied econometrics. Prof. Gowrisankaran has written on the economics of healthcare, analyzing hospital quality, estimating hospital entry behavior and examining the impact of health plan report cards. Prof. Gowrisankaran has also written on the banking industry, analyzing the extent of network externalities in electronic payments and evaluating the impact of ATM fees. In addition, Prof. Gowrisankaran has developed Bayesian methods of inference to analyze hospital quality and other methods to analyze the dynamics of demand for durable goods. Prof. Gowrisankaran's work has been widely published, appearing in journals such as Econometrica, the RAND Journal of Economics and the Journal of Health Economics. His research has been funded by governmental and private sector agencies including the National Science Foundation, the Federal Trade Commission and the NET Institute.

Prof. Gowrisankaran has served as a faculty member at the University of Minnesota Economics Department, and as a visiting faculty member at the Economics Departments of the University of Michigan, Harvard University and Yale University. Prof. Gowrisankaran has taught Competitive Strategy, Econometrics, Microeconomic Theory, and Industrial Organization at the undergraduate and graduate levels. Prof. Gowrisankaran has also served as a Visiting Scholar at the Federal Reserve Bank of San Francisco and as a consultant to other Federal Reserve Banks. Prof. Gowrisankaran has refereed for many economics journals, has given invited research seminars at most major economics departments in North America, and has served as a consultant or expert witness to governmental and private sector clients for a number of antitrust investigations.

We evaluate the impact of the Medicare HMO program and prescription drug coverage on elderly mortality using data from 1993 to 2000. We specify a model of plan entry and benefit choice and Medicare enrollee plan choice and health outcomes. We derive an estimator that is consistent with endogenous plan selection by using the quasi-experimental variation caused by peculiarities of the Medicare reimbursement system for HMOs. We find that enrollment in an HMO without drug coverage increases mortality while enrollment in an HMO with drug coverage has no significant impact, both relative to traditional Medicare. The economic value of the reduction in mortality from drug coverage far outweighs the costs. HMOs, and in particular HMOs without drug coverage, attract healthier enrollees than average.

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The Leonard Davis Institute of Health Economics.
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