IDEAS home Printed from https://ideas.repec.org/a/bla/ecinqu/v45y2007i1p82-99.html
   My bibliography  Save this article

Do Hmo Plans Reduce Health Care Expenditure In The Private Sector?

Author

Listed:
  • JAEUN SHIN
  • SANGHO MOON

Abstract

The cost containment performance of health maintenance organization (HMO) plans relative to non‐HMOs is examined using data from the 2000 Medical Expenditure Panel Survey. When various compounding factors are controlled for, among the privately insured, nonelderly population, HMO enrollment is found to contain neither total health care spending nor total insurance payment, though it reduces total out‐of‐pocket expenditure. We further find that this result is not attributed to selectivity in health plan choice due to health risk. The favorable cost sharing for enrollees and the distinct reimbursement schemes in HMO plans seem to account for no significant overall cost saving. (JEL I11, C25)

Suggested Citation

  • Jaeun Shin & Sangho Moon, 2007. "Do Hmo Plans Reduce Health Care Expenditure In The Private Sector?," Economic Inquiry, Western Economic Association International, vol. 45(1), pages 82-99, January.
    • Handle: RePEc:bla:ecinqu:v:45:y:2007:i:1:p:82-99
    DOI: 10.1093/ei-cbl008
    as

    Download full text from publisher

    File URL: https://doi.org/10.1093/ei-cbl008
    Download Restriction: no
    File URL: https://libkey.io/10.1093/ei-cbl008?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Donna B. Gilleskie, 1998. "A Dynamic Stochastic Model of Medical Care Use and Work Absence," Econometrica, Econometric Society, vol. 66(1), pages 1-46, January.
    2. Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-277, June.
    3. Hunt-McCool, Janet & Kiker, B F & Ng, Ying Chu, 1994. "Estimates of the Demand for Medical Care under Different Functional Forms," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 9(2), pages 201-218, April-Jun.
    4. Dowd, Bryan, et al, 1991. "Health Plan Choice and the Utilization of Health Care Services," The Review of Economics and Statistics, MIT Press, vol. 73(1), pages 85-93, February.
    5. Daniel Polsky & Sean Nicholson, 2004. "Why Are Managed Care Plans Less Expensive: Risk Selection, Utilization, or Reimbursement?," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 71(1), pages 21-40, March.
    6. Vuong, Quang H, 1989. "Likelihood Ratio Tests for Model Selection and Non-nested Hypotheses," Econometrica, Econometric Society, vol. 57(2), pages 307-333, March.
    7. Terza, Joseph V., 1998. "Estimating count data models with endogenous switching: Sample selection and endogenous treatment effects," Journal of Econometrics, Elsevier, vol. 84(1), pages 129-154, May.
    8. A. C. Cameron & P. K. Trivedi & Frank Milne & J. Piggott, 1988. "A Microeconometric Model of the Demand for Health Care and Health Insurance in Australia," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 55(1), pages 85-106.
    9. Michelle M. Mello & Sally C. Stearns & Edward C. Norton, 2002. "Do Medicare HMOs still reduce health services use after controlling for selection bias?," Health Economics, John Wiley & Sons, Ltd., vol. 11(4), pages 323-340, June.
    10. Baker, Laurence C & Corts, Kenneth S, 1996. "HMO Penetration and the Cost of Health Care: Market Discipline or Market Segmentation?," American Economic Review, American Economic Association, vol. 86(2), pages 389-394, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. World Bank, 2009. "Europe and Central Asia - Health insurance and competition," World Bank Publications - Reports 3064, The World Bank Group.
    2. Stefan Meyer, 2016. "Obesity and Health-Care Costs in Switzerland: Dealing with Endogeneity in Non-Linear Regression Models," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 152(3), pages 243-286, July.
    3. Hai Fang & John Rizzo, 2010. "Has the influence of managed care waned? Evidence from the market for physician services," International Journal of Health Economics and Management, Springer, vol. 10(1), pages 85-103, March.
    4. Miller, Cristina D. M. & Mishra, Ashok K., 2022. "Health Insurance Coverage, Government Payments, and Labor Allocation," IZA Discussion Papers 15262, Institute of Labor Economics (IZA).
    5. Terza, Joseph V. & Basu, Anirban & Rathouz, Paul J., 2008. "Two-stage residual inclusion estimation: Addressing endogeneity in health econometric modeling," Journal of Health Economics, Elsevier, vol. 27(3), pages 531-543, May.
    6. Chantal Grandchamp & Lucien Gardiol, 2011. "Does a mandatory telemedicine call prior to visiting a physician reduce costs or simply attract good risks?," Health Economics, John Wiley & Sons, Ltd., vol. 20(10), pages 1257-1267, October.
    7. Boyer, Robert, 2015. "L’essor du secteur de la santé annonce-t-il un modèle de développement anthropogénétique ?," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 17.
    8. Mishra, Ashok K. & Villacis, Alexis H. & Miller, Cristina D. M., 2022. "Market Facilitation Program Payments, Employer-Sponsored Health Insurance Coverage and Off-Farm Employment," IZA Discussion Papers 15834, Institute of Labor Economics (IZA).
    9. Mishra, Ashok K. & Harris, Michael & Bampasidou, Maria, 2018. "Health Insurance Coverage and Labor Allocation of Beginning Farm Operator Households," 2018 Annual Meeting, August 5-7, Washington, D.C. 274172, Agricultural and Applied Economics Association.
    10. Humphreys, Brad & Nyman, John & Ruseski, Jane, 2011. "The Effect of Gambling on Health: Evidence from Canada," Working Papers 2011-18, University of Alberta, Department of Economics.
    11. Stefan J Meyer, 2016. "Obesity and Health-Care Costs in Switzerland: Dealing with Endogeneity in Non-Linear Regression Models," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 152(III), pages 243-286, September.
    12. Anjani Kumar & Ashok K. Mishra & Sunil Saroj & Vinay K. Sonkar & Ganesh Thapa & Pramod K. Joshi, 2020. "Food safety measures and food security of smallholder dairy farmers: Empirical evidence from Bihar, India," Agribusiness, John Wiley & Sons, Ltd., vol. 36(3), pages 363-384, June.
    13. Chantal Grandchamp & Lucien Gardiol, 2008. "Does a mandatory telemedicine call prior to visiting a physician reduce costs or simply attract good risks?," Working Papers 0801, University of Lausanne, Institute of Health Economics and Management (IEMS).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Partha Deb & Pravin K. Trivedi, 2002. "Specification and Simulated Likelihood Estimation of a Non-normal Outcome Model with Selection: Application to Health Care Utilization," Economics Working Paper Archive at Hunter College 02/5, Hunter College Department of Economics, revised 2004.
    2. Giampiero Marra & Rosalba Radice & David M. Zimmer, 2020. "Estimating the binary endogenous effect of insurance on doctor visits by copula‐based regression additive models," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 69(4), pages 953-971, August.
    3. Sylvia Brandt & Peter Marie, 2011. "Racial Disparities in Hospital Length of Stay for Asthma: Implications for Economic Policies," Journal of Family and Economic Issues, Springer, vol. 32(1), pages 152-169, March.
    4. Partha Deb & Pravin K. Trivedi, 2012. "Empirical Models of Health Care Use," Chapters, in: Andrew M. Jones (ed.), The Elgar Companion to Health Economics, Second Edition, chapter 14, Edward Elgar Publishing.
    5. Trottmann, Maria & Zweifel, Peter & Beck, Konstantin, 2012. "Supply-side and demand-side cost sharing in deregulated social health insurance: Which is more effective?," Journal of Health Economics, Elsevier, vol. 31(1), pages 231-242.
    6. Anikó Bíró, 2014. "Supplementary private health insurance and health care utilization of people aged 50+," Empirical Economics, Springer, vol. 46(2), pages 501-524, March.
    7. Carol Rapaport & Christopher A. Trenholm, 2000. "What do we really know about trends in outpatient medical expenditures for children, 1977-1987?," Staff Reports 97, Federal Reserve Bank of New York.
    8. Sepehri, Ardeshir & Simpson, Wayne & Sarma, Sisira, 2006. "The influence of health insurance on hospital admission and length of stay--The case of Vietnam," Social Science & Medicine, Elsevier, vol. 63(7), pages 1757-1770, October.
    9. James E. Prieger, "undated". "A Generalized Parametric Selection Model for Non-Normal Data," Department of Economics 00-09, California Davis - Department of Economics.
    10. Matthew Jowett & Anil Deolalikar & Peter Martinsson, 2004. "Health insurance and treatment seeking behaviour: evidence from a low‐income country," Health Economics, John Wiley & Sons, Ltd., vol. 13(9), pages 845-857, September.
    11. Van Houtven, Courtney Harold & Norton, Edward C., 2004. "Informal care and health care use of older adults," Journal of Health Economics, Elsevier, vol. 23(6), pages 1159-1180, November.
    12. Lehmann, Hansjorg & Zweifel, Peter, 2004. "Innovation and risk selection in deregulated social health insurance," Journal of Health Economics, Elsevier, vol. 23(5), pages 997-1012, September.
    13. Sengupta, Reshmi & Rooj, Debasis, 2019. "The effect of health insurance on hospitalization: Identification of adverse selection, moral hazard and the vulnerable population in the Indian healthcare market," World Development, Elsevier, vol. 122(C), pages 110-129.
    14. Richard Dusansky & Çağatay Koç, 2010. "Implications of the Interaction Between Insurance Choice and Medical Care Demand," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 77(1), pages 129-144, March.
    15. Patrick Bajari & Han Hong & Ahmed Khwaja, 2006. "Moral Hazard, Adverse Selection and Health Expenditures: A Semiparametric Analysis," NBER Working Papers 12445, National Bureau of Economic Research, Inc.
    16. Munkin, Murat K. & Trivedi, Pravin K., 2003. "Bayesian analysis of a self-selection model with multiple outcomes using simulation-based estimation: an application to the demand for healthcare," Journal of Econometrics, Elsevier, vol. 114(2), pages 197-220, June.
    17. Çağatay Koç, 2005. "Health‐Specific Moral Hazard Effects," Southern Economic Journal, John Wiley & Sons, vol. 72(1), pages 98-118, July.
    18. James E. Prieger, "undated". "A Generalized Parametric Selection Model for Non-Normal Data," Department of Economics 00-09, California Davis - Department of Economics.
    19. Subir K. Chakrabarti & Srikant Devaraj & Pankaj C. Patel, 2021. "Minimum wage and restaurant hygiene violations: Evidence from Seattle," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(1), pages 85-99, January.
    20. Greene, William, 2007. "Functional Form and Heterogeneity in Models for Count Data," Foundations and Trends(R) in Econometrics, now publishers, vol. 1(2), pages 113-218, August.

    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ecinqu:v:45:y:2007:i:1:p:82-99. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/weaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.