How Does Managed Care Do It?
AbstractIntegrating the health services and insurance industries, as health maintenance organizations (HMOs) do, could lower expenditure by reducing either the quantity of services or unit price or both. We compare the treatment of heart disease in HMOs and traditional insurance plans using two datasets from Massachusetts. The nature of these health problems should minimize selection. HMOs have 30% to 40% lower expenditures than traditional plans. Both actual treatments and health outcomes differ little; virtually all the difference in spending comes from lower unit prices. Managed care may yield substantial increases in measured productivity relative to traditional insurance.
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Bibliographic InfoPaper provided by Harvard University Department of Economics in its series Scholarly Articles with number 2643884.
Date of creation: 2000
Date of revision:
Publication status: Published in Rand Journal of Economics
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