The effect of market structure on HMO premiums

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132 Scopus citations

Abstract

We examine the effects of HMO market structure on HMO premiums from 1988 to 1991. More competition, measured by the number of HMOs in the market area, reduces HMO premiums. Although this effect does not appear for IPAs before the highest level of competition is reached, it appears throughout the competitive range for Group HMOs. More market penetration, measured by the percent of the market area population enrolled in HMOs, reduces premiums for IPAs. Since the goal of managed competition is to reduce health care costs by creating competition among managed health care plans, our results offer encouragement for managed competition advocates.

Original languageEnglish (US)
Pages (from-to)81-105
Number of pages25
JournalJournal of Health Economics
Volume14
Issue number1
DOIs
StatePublished - May 1995

Keywords

  • Competition
  • Health maintenance organizations
  • Market structure
  • Premiums

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