The relative cost of Medicaid enrollees and the commercially insured in HMOs

Under several national health care reform proposals in 1994, many Medicaid beneficiaries would have enrolled in health maintenance organizations (HMOs) with other persons. Several states already enroll Medicaid beneficiaries in HMOs with commercial enrollees. This DataWatch examines the cost of Medicaid enrollees in HMOs relative to the cost of commercial enrollees. Data from nine HMOs indicate that, on average, Aid to Families with Dependent Children (AFDC) and poverty-related Medicaid enrollees cost 13 percent more than commercial enrollees cost. If one adjusts for enrollees' age and sex, Medicaid costs are 23 percent higher than commercial costs.