HMO versus non-HMO private managed care plans: an investigation on pre-switch consumption

This paper investigates the switching behavior of enrollees in U.S. managed care plans through treatment effect analyses of the disaggregated expenditures of the plan switchers and stayers prior to switching. Propensity score matching methods are used to estimate the average treatment effects on the treated where switching is the treatment. Analyses on subsamples provide detailed insights into pre-switch consumption behavior. The results, which are based on a national representative data set from the Medical Expenditure Panel Survey, indicate that switchers (from HMO to non-HMO) spend more on hospitalization, utilize less cholesterol checks and flu shots before switching. The other type of switchers (from non-HMO to HMO) spends less on prescribed medicine and office-based physician visits, while female switchers use less breast exams, Pap smears and mammograms prior to switching. The findings suggest that the non-HMO private managed care plans provide better coverage on hospitalization, office-based physician visits and prescribed medicine than the HMO plans.