The effect of HMOs on fee-for-service health care expenditures: evidence from Medicare.
This paper examines the relationship between HMO market share and fee-for-service health care expenditures using 1986-1990 county- and metropolitan statistical area-level data on Medicare expenditures and HMO market share. Fixed-effects estimates imply that fee-for-service expenditures are concave and decreasing in market share. Increases in market share from 20% to 30% are associated with 3-7% expenditure reductions. Instrumental variable estimates that exploit cross-sectional variation in HMO activity also indicate a concave relationship, with expenditures declining in market share for market shares above 15-18%, but imply larger expenditure responses to market share changes.
Baker
L C
LC
Department of Health Research and Policy, Stanford University School of Medicine, CA 94305-5092, USA. baker@osiris.stanford.edu
D002391:Catchment Area, Health / Q000191:economics / Q000706:statistics & numerical data; D003430:Cross-Sectional Studies; D004465:Economic Competition / Q000706:statistics & numerical data; D018588:Fee-for-Service Plans / Q000191:economics* / Q000458:organization & administration; D005102:Health Expenditures / Q000639:trends*; D006279:Health Maintenance Organizations / Q000191:economics* / Q000458:organization & administration; D006302:Health Services Research; D006278:Medicare / Q000706:statistics & numerical data*; D014481:United States