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Jaeun Shin, PhD, Master of Public Policy, Human Resources and Social Policy, KDI School of Public Policy and Management, 207-43 Cheognyangri2-dong, Dongdaemoon-gu, Seoul, 130-868, South Korea, 822-3299-1037, jshin@kdischool.ac.kr and Sangho Moon, PhD, Graduate School of Governance, Sungkyunkwan University, 53, 3-Ga, Myongryun-Dong, Chongno-Gu, Seoul, 110-745, South Korea.
As the number of HMO enrollees has proliferated during last decade, whether HMOs are effective in limiting medical service utilizations is an essential yet controversial issue in the medical care reform in the U.S. This study uses data from the 2000 Medical Expenditures Panel Survey to jointly analyze the effects of HMOs on the use of health services by the privately insured, nonelderly population, and the role of self-selection through endogenous insurance choice decisions in utilization performance of HMOs. If HMO enrollees somehow differ from enrollees of non HMO plans, differences in observed utilization may be a consequence of the underlying characteristics of the enrolled population, rather than the management of care in HMOs itself. For possible self-selection into HMOs, we compare private HMO versus non-HMO enrollees with respect to demographic, socioeconomic and health related conditions in binary plan choice model estimated by the probit specification. Results indicate that HMO enrollees are not particularly healthier than enrollees in non-HMO plans based on various measures of their health conditions. Respecting the high frequency of zero events in utilization, we employ the censored maximum likelihood estimation for the utilization effects of HMOs. By incorporating selection correction, we find evidence of positive selection bias in health plan choices. As health conditions are not major determinants of plan choice decisions, we suggest that HMO enrollment is a decision by financial risk segmentation; people enroll in HMOs because of lower amount and share of out of pocket expenditures in HMOs, and potentially use less service because of their serious concern on payment from their own resources. However, with control for self-selection, HMO enrollment is likely to increase the number of total office-based visits and total hospital outpatient visits. As HMO enrollees appreciate less the overall quality of health care, these findings imply that HMOs in private insurance market are not as effective in managing quality and utilization as supposed. Some adverse selection based on financial risk segmentation emerges; HMOs enrollees potentially use more services given the cost sharing and an occurrence of any health problem, compared with non-HMO enrollees. Improvement of utilization review may be necessary to assure the quality of health care and better utilization performance in private HMO plans
Learning Objectives: "At the conclusion of the session, the participant (learner) in this session will be able to
Keywords: HMOs, Utilization
Related Web page: www.meps.ahrq.gov
Presenting author's disclosure statement:
Organization/institution whose products or services will be discussed: Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey 2000
I do not have any significant financial interest/arrangement or affiliation with any organization/institution whose products or services are being discussed in this session.