The 131st Annual Meeting (November 15-19, 2003) of APHA

Abstract #66704

Xiao Xu, MA and Gail A. Jensen, PhD. Institute of Gerontology, Wayne State University, 87 E. Ferry St., 226 Knapp Bldg., Detroit, MI 48202, (313)577-2297, xiao_xu@wayne.edu

This study examines how enrollment in a managed care plan (Health Maintenance Organization (HMO), Preferred Provider Organization (PPO)) affects the functionality of near-elderly adults compared with the traditional fee-for-service (FFS) plans using the nationally representative Health and Retirement Survey (HRS). Potential selection bias into alternative insurance plans by individuals was addressed by selecting only those near-elders who held employer-sponsored health insurance and had no choice of plans. Two-limit Tobit models were used to test the effects of plan type on functionality, controlling for other potential determinants of functioning. Possible endogeneity of personal health behaviors (exercise, etc.) was also tested and controlled for using multistage estimation methods. Compared with FFS coverage, enrollment in HMO had a significant adverse effect on functionality among near-elderly adults. All else equal, a near-elder with mean level of functionality would experience an 11.12% increase in his/her functional limitation score (on a scale of 0-44, higher score means worse functionality) if enrolled in HMO. In contrast, enrollment in PPO had no effect on functioning. To eliminate possible selection effects at the employer level, the model was re-estimated on a subsample of near-elders whose employer coverage was through their spouse since employers typically do not have information about the health status of an employee's spouse. The findings strongly confirmed the prior ones. This suggests a worse performance by HMO in care quality, at least in terms of near-elderly adults' functionality. More research is needed to uncover the reasons for these observed differences in adult functioning across plans.

Learning Objectives:

At the conclusion of the presentation, the learner will be able to:
• Understand the differences among the three health care delivery systems (Health Maintenance Organization, Preferred Provider Organization and Fee-for-Service).
• Identify the significant effects of personal health behaviors, especially active physical exercises, on better functionality among near-elderly adults.
• Assess the performance of managed care (HMO, PPO) compared with FFS in terms of their effects on functionality among the near-elderly.

Presenting author's disclosure statement:
I do not have any significant financial interest/arrangement or affiliation with any organization/institution whose products or services are being discussed in this session.