HMO Coverage Reduces Variations In The Use Of Health Care Among Patients Under Age Sixty-Five
Affiliations
- Laurence C. Baker ( [email protected] ) is a professor of health research and policy at the Stanford University School of Medicine, in Stanford, California, and a research associate at the National Bureau of Economic Research (NBER).
- M. Kate Bundorf is an associate professor of health research and policy at the Stanford University School of Medicine and a faculty research fellow at NBER.
- Daniel P. Kessler is a professor of law and business at Stanford, a senior fellow at Stanford’s Hoover Institution, and a research associate at NBER.
Abstract
Variation in the use of hospital and physician services among Medicare beneficiaries is well documented. However, less is known about the younger, commercially insured population. Using data from the Community Tracking Study to investigate this issue, we found significant variation in the use of both inpatient and outpatient services across twelve metropolitan areas. HMO insurance reduces, but does not eliminate, the extent of this variation. Our results suggest that health plan spending to better organize delivery systems and manage care may be efficient, and regulations that arbitrarily cap plans’ spending on administration, such as minimum medical loss ratios, could undermine efforts to achieve better value in health care.
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