HMOS, MORAL HAZARD AND COST SHIFTING IN WORKERS COMPENSATION

Previous research has shown that workers respond to the economic incen tives provided in workers' compensation. In particular, claim frequenc y rises with increased benefits, and claim duration, on net, seems to increase. Here we provide additional evidence of another incidence of behavioral responses to incentives, We find that doctors in health mai ntenance organizations (HMOs) have a greater tendency to classify clai ms as compensable under workers' compensation than do other physicians . Our evidence suggests that the rapid expansion of HMOs over the 1980 -1990 period resulted in a significant increase in workers' compensati on claim frequency. (C) 1997 Elsevier Science B.V.