Are HMOs bad for health maintenance?

Abstract

This study examines the impact of Health Maintenance Organization (HMO) coverage on the provision of preventive medicine. We investigate whether any association reflects selection effects on the part of patients and/or physicians or a causal impact of managed care itself. Causal effects may occur on the supply side or the demand side. Using a large national database of Medicare and non-Medicare patients, we investigate these issues for eight common preventive medical procedures. We find that preventive care is substantially higher with HMO coverage than with traditional fee-for-service reimbursement. Our findings also suggest that the impact of HMOs on preventive medicine is a causal one, and does not merely reflect selection effects. Both supply-side (e.g. provider) and demand-side (e.g. patient) factors appear to play a role in the higher incidence of preventive care among HMO enrollees. Patient demand effects are stronger for simple treatments such as physicals, while supply-side effects seem to dominate for relatively complex preventive care procedures such as mammograms.

Essays on Private Health Insurance in Public Programs

“…found that MA patients had higher rates for mammography screening, pap smears, eye exams, and flu vaccination. Rizzo (2005) found the same pattern for other preventive care measures, such as checking blood pressure and cholesterol. , Landon et al (2004 found that MA patients had higher rates of vaccination for pneumonia and influenza.…”

“…The second body of literature I contribute to is the influence of health insurers on the use of preventive care. This literature (e.g., Rizzo, 2005;Greene, Blustein, and Laflamme, 2001;Landon et al, 2004) …”

“…Evidence suggests that MA patients are residually healthier (Newhouse et al, 2012) and perhaps more likely to screen for cancer (e.g., Baker et al, 2004;Rizzo, 2005) than patients with traditional Medicare. 23 A naive estimate of β is thus likely to be biased in the direction of indicating that MA enrollment decreases cancer mortality.…”

“…First, it addresses causality in the relationship between MA enrollment and the use of preventive care by exploiting variation over time. Rizzo (2005) used instrumental variables, with instruments similar to those used in this study, to argue that there was some causal effect of MA enrollment on prevention. However, Rizzo (2005) only had one year of data and thus relied only on spatial variation.…”

“…Rizzo (2005) used instrumental variables, with instruments similar to those used in this study, to argue that there was some causal effect of MA enrollment on prevention. However, Rizzo (2005) only had one year of data and thus relied only on spatial variation. Second, this study examines a more recent time period than the previous literature.…”