Geographic variation in determinants of Medicare managed care enrollment

Objective. To examine the effect of adjusted average per capita cost (AAPCC ) rate and volatility on Medicare risk plan enrollment at the county level. Data Sources. Secondary data from the Health Care Financing Administration' s office of managed care and other sources were merged to create comprehens ive data on all Medicare risk plans in 3,069 of the 3,112 U.S. counties in December 1996. Study Design. A two-step least squares regression was estimated to examine the effects of AAPCC rate and volatility, commercial HMO enrollment, market factors, and characteristics of the county population on Medicare HMO enro llment. The model was also used to simulate the effects of the Balanced Bud get Act of 1997. Data from the Health Care Financing Administration were me rged with other sources at the county level. The Federal Information Proces sing Standards code and a crosswalk file matching that code with the county name linked the data across sources. Principle Findings. The AAPCC rate has a small positive effect on the proba bility of Medicare HMO availability and enrollment. However, commercial HMO enrollment has a much stronger positive effect on Medicare HMO enrollment. Volatility has a negative effect on the probability of any Medicare HMO en rollment. Conclusions. The results suggest that payment changes enacted as part of th e Bale Balanced Budget Act will have a limited effect on Medicare HMO enrol lment, especially in rural areas. Other policy changes are needed to stimul ate Medicare HMO enrollment.