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This paper investigates whether managed care ameliorates or aggravates ethnic and racial health care disparities in Medicare. First, we analyze the choice of type of insurance made by Medicare enrollees to see if minorities are more likely to choose the managed care alternative. Second, we study the differential effect of managed care on disparities using several measures of access, use and cost of services. Both analyses are conducted on two independent data sets, the Medicare Current Beneficiary Survey and the National Health Interview Survey. We conclude that relative to Whites, minorities are at least as well off – in terms of benefits and costs – in Medicare managed care as in Medicare traditional indemnity plans.