Contents

HMO Plans, Self-selection and Utilization of Health Care Services

Shin, Jaeun / Moon, S.

Abstract

This study examines the effect of health maintenance organizations (HMOs) on the use of health care services among the privately insured, nonelderly population. To consider jointly the possible self-selection bias and high frequency of zero observations in the applied utilization measures, we accommodate the endogeneity of health plan choice decisions in the censored regression model. Using data from the 2000 Medical Expenditure Panel Survey, we find strong evidence for favourable self-selection into HMO plans. Health maintenance organization enrollment is found to encourage greater use of office-based and hospital outpatient services. Overall satisfaction with the quality of care among HMO members is relatively low compared to that among nonHMO members. These findings suggest that more effort is needed to develop management strategies in HMOs in order to contain the moral hazard in utilization and assure the quality of service provided within the network of HMO providers.

Issue Date
2007
Publisher
ROUTLEDGE JOURNALS, TAYLOR & FRANCIS LTD
Keywords
MEDICAID MANAGED CARE; FEE-FOR-SERVICE; INSURANCE; DEMAND; PERFORMANCE; ENROLLEES; MODELS; CHOICE; IMPACT; BIAS
Citation
Applied Economics, v.39, no.21, pp.2769 - 2784, 2007
DOI
10.1080/00036840600749391
Journal Title
Applied Economics
Start Page
2769
End Page
2784
ISSN
0003-6846
Language
English
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