NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Enter at Your Own Risk: HMO Participation and Enrollment in the MedicareRisk Market

Jean Abraham, Ashish Arora, Martin Gaynor, Douglas Wholey

NBER Working Paper No. 7385
Issued in October 1999
NBER Program(s):   HC

We examine HMO participation and enrollment in the Medicare risk market for the years 1990 to 1995. We develop a profit- maximization model of HMO behavior, which explicitly considers potential linkages between an HMO's production decision in the commercial enrollee market and its participation and production decisions in the Medicare risk market. Our results suggest that the payment rate is a primary determinant of HMO participation, while the price of a supplemental Medicare insurance policy positively affects HMO Medicare enrollment. We also find empirical support for the existence of complementarities in the joint production of an HMO's commercial and Medicare products.

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Published: Abraham, Jean, Ashish Arora, Martin Gaynor and Douglas Wholey. "Enter At Your Own Risk: HMO Participation And Enrollment In The Medicare Risk Market," Economic Inquiry, 2000, v38(3,Jul), 385-401.

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