Financial performance in the social health maintenance organization, 1985-88

Since early 1985, four social health maintenance organizations have delivered integrated health and long-term care services to Medicare beneficiaries under congressionally mandated waivers that included shared public-program risk for losses. Three of four sites had substantial losses in the first 3 years, primarily because of slow enrollment and resultant high marketing and administrative costs. After assuming full risk, two of the three showed surpluses in 1988. Service and management costs for expanded long-term care were similar across sites and were affordable within the framework of Medicare and Medicaid reimbursement and private premiums.