Contents

Do HMO Plans Reduce Health Care Expenditure in the Private Sector?

Shin, Jaeun / Moon, Sangho

Abstract

The cost containment performance of health maintenance organization (HMO) plans relative to non-HMOs is examined using data from the 2000 Medical Expenditure Panel Survey. When various compounding factors are controlled for, among the privately insured, nonelderly population, HMO enrollment is found to contain neither total health care spending nor total insurance payment, though it reduces total out-of-pocket expenditure. We further find that this result is not attributed to selectivity in health plan choice due to health risk. The favorable cost sharing for enrollees and the distinct reimbursement schemes in HMO plans seem to account for no significant overall cost saving.

Issue Date
2007-01
Publisher
Blackwell Publishing, Inc.
Keywords
FEE-FOR-SERVICE; MEDICAL-CARE; MANAGED CARE; MAINTENANCE-ORGANIZATIONS; RISK SELECTION; INSURANCE; DEMAND; MODEL; COST; PERFORMANCE
DOI
10.1093/ei-cbl008
Journal Title
Economic Inquiry
Start Page
82
End Page
99
ISSN
0095-2583
Language
English
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