This paper develops a multiple-period theoretical model of health maintenance organization (HMO) coverage of medical procedures as a function of HMO competition and a market's predisposition toward managed care. Previous empirical results regarding one laser procedure were not predicted by a single-period model. The new model predicts that more favorable predisposition toward managed care is positively associated with coverage of procedures for which coverage is discretionary. The empirical analysis in this paper focuses on 13 additional laser procedures. The new empirical findings are different from the previous findings and are more consistent with the hypotheses generated by the new theoretical model.
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)