Medicare Contracting Risk/Medicare Risk Contracting: A Life-Cycle View from Twelve Markets

Feb. 21, 2003
Health Services Research, 38:1, Part II (February 2003), pp. 395-417
Robert E. Hurley, Joy M. Grossman, Bradley C. Strunk

From 1996 to 2001, the activities and expectations of health plans in local markets underwent a rapid and dramatic transition from enthusiasm for the Medicare HM O product, to abrupt reconsideration of interest corresponding to changes in the Balance Budget Act of 1997, on to significant retrenchment and disillusionment. Policy developments were important in their own right, but they also interacted with shifts in the strategic aims and operational experiences of health plans that reflect responses to the insurance underwriting cycle pressures and pushback form providers.

The Medicare HMO program went through a substantial reversal of fortune during the study period, raising doubts about whether its downward course can be altered. Market-level analysis reveals that virtually all momentum for the program has been lost and that enrollment is shrinking back to the levels and locations found in the mid 1990s.

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