Skip Navigation U.S. Department of Health and Human Services www.hhs.gov
Agency for Healthcare Research Quality www.ahrq.gov
Archive print banner

Health Care Costs and Financing

This information is for reference purposes only. It was current when produced and may now be outdated. Archive material is no longer maintained, and some links may not work. Persons with disabilities having difficulty accessing this information should contact us at: https://info.ahrq.gov. Let us know the nature of the problem, the Web address of what you want, and your contact information.

Please go to www.ahrq.gov for current information.

HMOs do not appear to adversely affect the health of the near-elderly and may benefit those with chronic health conditions

Health maintenance organizations (HMOs) are a major and growing source of health insurance for the near-elderly (those aged 55 to 64) in the United States. Many have questioned the use of capitation by HMOs (doctors are reimbursed a set fee per patient, regardless of services provided), saying it motivates providers to order fewer tests or perform fewer procedures and puts the patient's needs last. However, a new study, supported by the Agency for Healthcare Research and Quality (HS13992), found no ill effects of HMOs on the health status of the near-elderly. In fact, those with chronic health conditions actually fared better upon enrolling in managed care plans.

Xiao Xu, Ph.D., of the University of Michigan, and Gail A. Jensen, Ph.D., of Wayne State University, studied 4,044 adults with employer-sponsored health insurance who participated in the 1994 to 2000 waves of the Health and Retirement Study, a national survey. The researchers developed a model to examine whether enrolling in an HMO or Preferred Provider Organization (PPO) affected the health of this group and a subgroup of those with chronic health problems such as arthritis, high blood pressure, and diabetes. The model included the type of health insurance plan (HMO or PPO), lifestyle behaviors, demographics, family characteristics, baseline health, and survey year.

The study uncovered some modest beneficial effects of HMOs on adults in this age group who had serious and longstanding chronic health conditions. They were 1.26 times as likely to report very good as opposed to good health when they were enrolled in HMOs. For relatively healthy near-elders, however, being in a particular type of plan—whether HMO, PPO, or fee-for-service (FFS)—had no bearing on health status. The typical benefit provisions in HMOs may underlie their benefit to the chronically ill. Most HMO plans charge either nothing or a very modest copay ($10 to $20) for a doctor's visit, whereas PPOs and FFS plans generally entail higher out-of-pocket expenses via both an annual deductible and coinsurance for expenses above the deductible. HMOs also emphasize preventive care, preventing the worsening of diagnosed chronic conditions.

See "Health effects of managed care among the near-elderly," by Drs. Xu and Jensen, in the August 2006 Journal of Aging and Health 18(4), pp. 507-533.

Return to Contents
Proceed to Next Article

The information on this page is archived and provided for reference purposes only.

 

AHRQ Advancing Excellence in Health Care