Making Babies Healthier by Providing a Managed Care Option to California's Poor

Tania Barham, University of Colorado at Boulder
Paul Gertler, University of California, Berkeley
Kristiana Raube, University of California, Berkeley

During the 1990s, California shifted over half its Medicaid beneficiaries from a fee-for-service health system into managed care. California was not alone as 57 percent of all Medicaid recipients nation-wide were in managed care by 2002. Despite the expansion of Medicaid managed care, there has been little rigorous analysis of the impact on quality of care. This paper investigates whether mandating a managed care option for California Medicaid beneficiaries improves access to prenatal care and birth outcomes in a traditionally fee-for-service system. The research design exploits the phasing in of managed care over time and counties. We use longitudinal birth record information from 1991 through 2001. We find that offering managed care reduced the number of low-birth weight and premature births for some types of managed care but not all. That managed care had positive health benefits is important for public policy given that cost savings have not arisen.