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A number of states have adopted mandatory managed care to provide health services to Medicaid patients, raising concerns that the care provided may be of lower quality than care provided under traditional fee-for-service arrangements. In this article, we study the effect of Pennsylvania's mandatory managed care program, HealthChoices, on health outcomes and the cost of care for pregnant Medicaid patients. Using difference-in-differences, we find evidence that the adoption of managed care resulted in fewer preventable complications, particularly for more severely ill mothers, but no general reduction in costs except in the highest decile of the cost distribution.
