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Enter at your own risk: HMO participation and enrollment in the Medicare risk Market
journal contribution
posted on 1997-01-01, 00:00 authored by Jean Abraham, Ashish Arora, Martin GaynorMartin Gaynor, Douglas R. WholeyWe examine HMO participation and enrollment in the Medicare risk market for the years
1990 to 1995. We develop a profit-maximization model of HMO behavior, which explicitly
considers potential linkages between an HMO’s production decision in the commercial enrollee
market and its participation and production decisions in the Medicare risk market. Our results
suggest that the AAPCC is a primary determinant of HMO participation, while the price of a
supplemental Medicare insurance policy positively affects HMO Medicare enrollment. We also
find empirical support for the existence of complementarities in the joint production of an HMO’s
commercial and Medicare products.