COST SHIFTING IN A MENTAL-HEALTH CARVE-OUT FOR THE AFDC POPULATION

This study tests whether the managed care vendor shifted costs to Medi caid-reimbursed medical care after the start of the mental health carv e-out for the Aid to Families with Dependent Children (AFDC) populatio n in Massachusetts. We used claims data over a 4-year period to estima te expenditures for four types of health services, two of which were p aid for by the managed care vendor and two by Medicaid. Total per pers on public expenditures declined by only about 3 percent. Inpatient psy chiatric services were replaced by outpatient psychiatric services and some pharmaceuticals, but overall there was little or no evidence of cost shifting to the medical sector These results are in contrast to w hat was found in a sample of Medicaid beneficiaries eligible due to a mental health disability.