Research on the Relationship Between Market Characteristics and the Number and Type of Medicare Enrollees in HMOs

What factors help explain why Medicare beneficiaries choose to enroll in different types of Medicare plans? A research team at the University of Michigan examined this question by assessing whether certain market conditions encouraged enrollment in different types of plans. Using the Community Tracking Study Household Survey data, InterStudy Survey data, a telephone survey of the ten largest sellers of Medigap insurance policies nationwide, and a survey of three insurers selling Medigap policies in each of the 60 Community Tracking Study markets, they compared individuals who choose to enroll in Medicare HMOs to those who choose to enroll in Medicare fee-for-service plans. Market characteristics examined included prevalence and types of supplemental premiums offered, HMO reimbursement rates, and measures of HMO competition. One hypothesis tested was that Medicare HMOs market their products more aggressively in areas where Medicare pays a high Average Adjusted Per Capita Costs (AAPCC) rate. Their objective was to better understand the role of market forces on Medicare, and subsequently on enrollees in Medicare HMOs.