MEDICAID MANAGED CARE AND THE MARKETPLACE

In 1994 and 1995, Tennessee, Hawaii, Rhode Island, and Oklahoma began massive expansions of Medicaid managed care, growing from three health plans covering a few enrollees to 27 plans covering the great majorit y a year later: Some firms aggressively pursued expansion, while other s had very limited business objectives. Although established insurers often nominated the Medicaid markets, newly developed firms, some prov ider-sponsored, were also important. Despite the relatively low Medica id capitation rates in the 1996-97 period, Medicaid plans in three sta tes had an average 1% net profit margin.