TY  - JOUR
AU  - Shen,Yu-Chu
AU  - Wu,Vivian
AU  - Melnick,Glenn
TI  - The Changing Effect of HMO Market Structure: An Analysis of Penetration, Concentration, and Ownership Between 1994-2005
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13775
PY  - 2008
Y2  - February 2008
UR  - http://www.nber.org/papers/w13775
L1  - http://www.nber.org/papers/w13775.pdf
N1  - Author contact info:
Yu-Chu Shen
Graduate School of Business and Public Policy
Naval Postgraduate School
555 Dyer Road
Monterey, CA 93943
Tel: 831/656-2951
E-Mail: yshen@nps.edu

Vivian Wu
University of Southern California
School of Policy, Planning, and Development
650 Childs Way, RGL 305
Los Angeles, CA 90089
Tel: 617-588-0320
E-Mail: vwu@nber.org

Glenn Melnick
University of Southern California
E-Mail: gmelnick@usc.edu
AB  - We analyze the role of three aspects of HMO market structure -- HMO penetration, HMO plan concentration, and HMO for-profit share on explaining hospital cost and revenue growth during the HMO expansion period (1994-1999) and backlash period (2000-2005).  We find that HMO penetration effects differ over time: a 10 percentage point increase in HMO enrollment leads to 2.5 percent reduction in cost and revenues in the expansion period but only 0.4-1 percent reduction in the backlash period. Furthermore, this HMO backlash effect can be attributed to HMO dis-enrollment as well as the changing nature of HMO product.  We find that revenue increases at a slower rate (by about 5 percent) in markets with relatively concentrated HMO markets power and more competitive hospital markets.  Finally, increased for-profit HMO presence is associated with smaller cost and revenue growth, and the effect differs between low and high penetration markets.
ER  -