EconPapers    
Economics at your fingertips  
 

Why Are Managed Care Plans Less Expensive: Risk Selection, Utilization, or Reimbursement?

Daniel Polsky and Sean Nicholson

Journal of Risk & Insurance, 2004, vol. 71, issue 1, 21-40

Abstract: This article develops a new method of decomposing the cost difference between HMO and non‐HMO plans into observed risk selection, unobserved risk selection, utilization differences, and differences in provider reimbursement rates. We implement this method using a large national sample of employer‐sponsored health insurance enrollees from the Community Tracking Study Household Survey. We find no evidence that HMO plans attract a disproportionate share of low‐risk enrollees; the US$188 difference between HMO and non‐HMO medical expenditures per enrollee can be explained by the relatively low provider reimbursement rates paid by HMO plans. This indicates there may be little need for employers to risk adjust insurance premiums or otherwise restrict employee choice of plan types.

Date: 2004
References: Add references at CitEc
Citations: View citations in EconPapers (12) Track citations by RSS feed

Downloads: (external link)
https://doi.org/10.1111/j.0022-4367.2004.00077.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jrinsu:v:71:y:2004:i:1:p:21-40

Ordering information: This journal article can be ordered from
http://www.wiley.com/bw/subs.asp?ref=0022-4367

Access Statistics for this article

Journal of Risk & Insurance is currently edited by Keith Crocker

More articles in Journal of Risk & Insurance from The American Risk and Insurance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2019-12-13
Handle: RePEc:bla:jrinsu:v:71:y:2004:i:1:p:21-40