Has the increase in HMO enrollment within the Medicaid population changed the pattern of health service use and expenditures?

Objective: To describe changes in health services use and expenditures within the Medicaid population between 1987 and 1997 and to estimate the extent to which the increase in Health Maintenance Organization (HMO) enrollment has influenced these changes.

Subjects: Individuals under the age of 65 years in the 1987 National Medical Expenditure Survey and the 1997 Medical Expenditure Panel Survey enrolled in Medicaid the entire year.

Research Design: Using bivariate and multivariate techniques, we compared several measures of health services use and expenditures across three groups: (1) individuals enrolled in Medicaid for all of 1987; (2) individuals enrolled in Medicaid for all of 1997 but never enrolled in an HMO; and (3) individuals enrolled in Medicaid for all of 1997 and enrolled in an HMO for at least part of the year.

Results: Medicaid enrollees in 1997 differ little from Medicaid recipients in 1987 with respect to use and expenditures. Modest but statistically significant differences emerge, however, when a distinction is made between HMO enrollees and non-HMO enrollees in 1997. Specifically, 1997 Medicaid HMO enrollees have significantly fewer hospital visits than 1987 Medicaid enrollees and spend significantly less on health services than 1997 non-HMO enrollees.

Conclusions: Our findings suggest that the increase in HMO enrollment may have held down use and expenditures to rates modestly lower than what would have been expected had HMO enrollment not increased.