HMO market penetration and costs of employer-sponsored health plans

Laurence C. Baker, Joel C. Cantor, Stephen H. Long, M. Susan Marquis

Research output: Contribution to journalArticlepeer-review

20 Scopus citations

Abstract

Using two employer surveys, we evaluate the role of increased health maintenance organization (HMO) market share in containing costs of employer-sponsored coverage. Total costs for employer health plans are about 10 percent lower in markets in which HMOs' market share is above 45 percent than they are in markets with HMO enrollments of below 25 percent. This is the result of lower premiums for HMOs than for non-HMO plans, as well as the competitive effect of HMOs that leads to lower non-HMO premiums for employers that continue to offer these benefits. Slower growth in premiums in areas with high HMO enrollments suggests that expanded HMO market share may also lower the long-run growth in costs.

Original languageEnglish (US)
Pages (from-to)121-128
Number of pages8
JournalHealth Affairs
Volume19
Issue number5
DOIs
StatePublished - 2000

All Science Journal Classification (ASJC) codes

  • Health Policy

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