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Enter at Your Own Risk: HMO Participation and Enrollment in the MedicareRisk Market

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Author Info
Jean Abraham
Ashish Arora
Martin Gaynor
Douglas Wholey

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Abstract

We examine HMO participation and enrollment in the Medicare risk market for the years 1990 to 1995. We develop a profit- maximization model of HMO behavior, which explicitly considers potential linkages between an HMO's production decision in the commercial enrollee market and its participation and production decisions in the Medicare risk market. Our results suggest that the payment rate is a primary determinant of HMO participation, while the price of a supplemental Medicare insurance policy positively affects HMO Medicare enrollment. We also find empirical support for the existence of complementarities in the joint production of an HMO's commercial and Medicare products.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7385.

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Date of creation: Oct 1999
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Handle: RePEc:nbr:nberwo:7385

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I1 - Health, Education, and Welfare - - Health
L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
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  2. Gourieroux, Christian & Monfort, Alain & Trognon, Alain, 1984. "Pseudo Maximum Likelihood Methods: Theory," Econometrica, Econometric Society, vol. 52(3), pages 681-700, May. [Downloadable!] (restricted)
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  3. Danzon, Patricia Munch, 1982. "Hospital `profits' : The effects of reimbursement policies," Journal of Health Economics, Elsevier, vol. 1(1), pages 29-52, May. [Downloadable!] (restricted)
  4. Pauly, Mark V, 1987. "Nonprofit Firms in Medical Markets," American Economic Review, American Economic Association, vol. 77(2), pages 257-62, May. [Downloadable!] (restricted)
  5. Wholey, Douglas & Feldman, Roger & Christianson, Jon B., 1995. "The effect of market structure on HMO premiums," Journal of Health Economics, Elsevier, vol. 14(1), pages 81-105, May. [Downloadable!] (restricted)
  6. Wholey, Douglas & Feldman, Roger & Christianson, Jon B. & Engberg, John, 1996. "Scale and scope economies among health maintenance organizations," Journal of Health Economics, Elsevier, vol. 15(6), pages 657-684, December. [Downloadable!] (restricted)
  7. Given, Ruth S., 1996. "Economies of scale and scope as an explanation of merger and output diversification activities in the health maintenance organization industry," Journal of Health Economics, Elsevier, vol. 15(6), pages 685-713, December. [Downloadable!] (restricted)
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  1. John Cawley & Michael Chernew & Catherine McLaughlin, 2002. "CMS Payments Necessary to Support HMO Participation in Medicare Managed Care," Forum for Health Economics & Policy, Berkeley Electronic Press, vol. 5(1), pages 1027-1027. [Downloadable!] (restricted)
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