Medicare Health Plan Decisions: Will Regional Competitive Bidding Work?

What is the market entry and exit behavior of health plans (HMOs and PPOs)? The project modeled this behavior in order to provide input to policymakers trying to enhance private plan participation in Medicare. The researchers determined whether plans will require higher premiums or more extensive risk sharing to induce them to enter counties or regions with low population densities. They also modeled the enrollment and disenrollment from health plans to determine whether differences in the service area definitions (county versus regional service areas) may exacerbate adverse selection and cause instability in plan premiums and participation. The objective of this study was to help provide information to federal policymakers implementing Medicare Advantage (formerly Medicare+Choice) and planning for private plan competition demonstrations.