How Has the 80th Percentile Rule Affected Alaska's Health-Care Expenditures?

Abstract

We use the Health Expenditures by State of Residence data (1991-2014) compiled by Centers for Medicare & Medicaid Services to examine the causal effect of the 80th percentile rule on Alaska's health care expenditures. We find evidence that Alaska's expenditures would have been lower in the absence of rule. The share of the overall increase in expenditures that we attribute to the 80th percentile rule is between 8.61% and 24.65%. It is important to note that using expenditures as a proxy for costs has limitations as it is the product of both quantity of services used and prices.