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- Title
The Impact of HMO Competition on Private Health Insurance Premiums, 1985- 1992.
- Authors
Wickizer, Thomas M.; Feldstein, Paul J.
- Abstract
A critical unresolved health policy question is whether competition stimulated by managed care organizations can slow the rate of growth in health care expenditures. The competitive effects of health maintenance organizations (HMOs) on the growth in fee-for-service indemnity insurance premiums over the period 1985- 1992 are analyzed using premium data on 95 groups that had policies with a single, large, private insurance carrier. Multiple regressions are used to estimate the effect of HMO market penetration on insurance premium growth rates. HMO penetration had a statistically significant (p < .015) negative effect on the rate of growth in indemnity insurance premiums. For an average group located in a market whose HMO penetration rate increased by 25 percent, the real rate of growth in premiums would be approximately 5.9 percent instead of 7.0 percent. The findings indicate that competitive strategies, relying on managed care, have significant potential to reduce health insurance premium growth rates, thereby resulting in substantial cost savings over time.
- Subjects
HEALTH maintenance organizations; HEALTH policy; MANAGED care programs; INSURANCE premiums; INSURANCE policies; MEDICAL care; HEALTH insurance; MEDICAL care costs; HEALTH
- Publication
Journal of Risk & Insurance, 1996, Vol 63, Issue 2, p327
- ISSN
0022-4367
- Publication type
Abstract