The effect of HMOs on premiums in employment-based health plans.
This study documents the effect of HMOs on premiums in employment-based health plans. We analyzed a survey of Minnesota employers conducted in 1986. Among 922 usable observations, 239 firms offered HMOs in addition to fee-for-service (FFS) health plans. We estimated an equation for the probability of offering an HMO, followed by equations for HMO enrollment share, and HMO and FFS premiums. The weighted average HMO and FFS premium in firms that offer HMOs was compared to the premium of FFS-only firms. We found that offering an HMO raises the average premium for family coverage health insurance by $25.14 per month and for single coverage by $3.68 per month. This effect was smaller for firms in the Twin Cities metropolitan area. HMOs may be viewed as a progressive and innovative health care benefit, but they are likely to increase firms' health insurance premiums.
Feldman
R
R
Institute for Health Services Research, University of Minnesota, Minneapolis 55455.
Dowd
B
B
Gifford
G
G
D017047:Cost Sharing / Q000706:statistics & numerical data; D003669:Deductibles and Coinsurance / Q000706:statistics & numerical data; D017049:Employer Health Costs / Q000706:statistics & numerical data; D005249:Fees and Charges / Q000706:statistics & numerical data*; D005251:Fees, Medical / Q000706:statistics & numerical data; D006264:Health Benefit Plans, Employee / Q000191:economics* / Q000706:statistics & numerical data; D006279:Health Maintenance Organizations / Q000191:economics* / Q000706:statistics & numerical data; D006302:Health Services Research; D015273:Insurance Selection Bias; D008910:Minnesota; D017059:Models, Econometric; D011336:Probability; D011795:Surveys and Questionnaires