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Research Findings #15: HMO Enrollment in the United States: Estimates Based on Household Reports, 1996

by Jessica S. Banthin, Ph.D., and Amy K. Taylor, Ph.D., Agency for Healthcare Research and Quality



Abstract

This report from the 1996 Medical Expenditure Panel Survey (MEPS) presents estimates of the total number of people enrolled in HMO (health maintenance organization) plans for the first half of 1996. The estimates are based on MEPS household survey data, which rely on household members' understanding and reporting of HMO status. According to MEPS household data, 91.6 million people—41.9 percent of the total insured population—were enrolled in HMOs in the first half of 1996. HMO enrollment rates were higher among the privately insured than the publicly insured, higher among children and younger adults than older adults, and higher for Hispanics and blacks than for the group of whites and people of other races. In addition, middle- and high-income people were more likely than those with lower incomes to be enrolled in HMOs. HMO enrollment was higher in the West and in urban areas. There were some health status differences in HMO enrollment for publicly insured people. Among people on Medicare or Medicaid, those who needed help with daily activities or were limited in their ability to work or do housework were less likely than others to be in an HMO. 

Introduction

The number of people enrolled in managed care plans has grown rapidly in the last decade. As health care costs continue to rise, employers increasingly have switched from traditional indemnity plans to managed care plans in the hope of controlling the costs of offering health insurance coverage to their employees. While managed care can take many forms, one of the oldest types of managed care plans is the health maintenance organization (HMO). In more recent years, public payers such as Medicare and State Medicaid programs also have begun to contract with HMOs. An HMO is a prepaid health plan in which the cost of medical care typically is covered in full or with a small copayment.

This report presents estimates of the total number of people enrolled in HMO plans for the first half of 1996. The estimates are based on data from Round 1 of the 1996 Medical Expenditure Panel Survey (MEPS) Household Component, which is nationally representative of the U.S. civilian noninstitutionalized population. Because household survey data are used, the accuracy of the HMO enrollment estimates presented in this analysis depend on household members' understanding and reporting of HMO status. From a consumer's point of view, the main characteristics of HMOs and other types of managed care plans, compared with traditional indemnity plans, are the limited choice of health care providers and smaller out-of-pocket payments. The Technical Appendix at the end of this report shows the exact questions used to identify HMO enrollees in the MEPS Household Component.

This report focuses on HMO enrollment, excluding from the analyses enrollment in other types of managed care plans. HMOs are one of the oldest types of managed care health plans, first becoming common as a result of the 1973 Health Maintenance Organization Act. This Federal law defined HMO plans, emphasizing their coverage of preventive care services. The law also mandated that employers offer an HMO as an insurance choice to their employees if there is an HMO in the area and if the employer offers a choice of plans. HMOs are federally qualified if they meet the requirements spelled out in the 1973 HMO Act and in subsequent modifications. Whereas older HMOs tend to be nonprofit staff and group models, many current HMOs include for-profit plans that contract with a network of individual providers as well as groups.

Some of the estimates of total HMO enrollees presented in the discussion below cannot be derived exactly from the accompanying tables because of rounding error. Whenever the number presented in the text is at slight variance with the number generated from the corresponding table, it will be noted.

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Total HMO Enrollment

In the first half of 1996, a total of 91.6 million people were enrolled in HMOs. Multiplying the numbers in Table 1 (the percent enrolled in an HMO times the total population) yields an estimate slightly higher than 91.6 million because of rounding error. HMO enrollees made up 34.8 percent of the total U.S. civilian noninstitutionalized population and 41.9 percent of the population with health insurance (Table 1). The rate of HMO enrollment was significantly higher in the non-elderly population than in the elderly population (45.6 vs. 20.1 percent). HMO enrollment was also higher among Hispanics of any race (51.6 percent) and blacks (47.2 percent) than for the group of whites and others (40.1 percent). (People of other races, including Asians, Pacific Islanders, American Indians, and Alaska Natives, are grouped with whites for this report.) In addition, insured people living in middle- and high-income families were more likely to be enrolled in an HMO (43.4 percent and 45.6 percent, respectively) than were people living in poor or near-poor (32.7 percent) and low-income families (37.0 percent). See the Technical Appendix for definitions of the terms used in this report.

HMO enrollment varied significantly when the total insured population was broken out into three mutually exclusive subgroups: people under 65 with any private insurance, publicly insured people under 65 with no private coverage, and people age 65 and over with Medicare coverage.

HMO enrollment was highest in the privately insured non-elderly population (Tables 2–4). About 47.6 percent of the privately insured population under 65, or 75.8 million people, were HMO enrollees. The 1987 National Medical Expenditure Survey showed 28.0 million HMO enrollees (17.1 percent) in the privately insured population under 65 (Taylor, Beauregard, and Vistnes, 1995). According to data from these two national surveys, HMO enrollment grew by a factor of 2.8 from 1987 to 1996.

The rate of HMO enrollment was lower among the publicly insured non-elderly population than among the privately insured non-elderly population. In the first half of 1996, 36.5 percent of the publicly insured population under 65, or 9.5 million people, were HMO enrollees (Table 3). This total number is at variance with the estimate generated from the first row of Table 3 because of rounding error.

The lowest enrollment rates were found among Medicare beneficiaries age 65 and over. In this group, 20.0 percent, or 6.2 million people, were enrolled in an HMO in the first half of 1996, either through their Medicare coverage or through private insurance (Table 4).

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Privately Insured Non-Elderly

Table 2 shows the percent of the privately insured population under age 65 who were enrolled in HMOs in 1996 by various characteristics. HMO enrollment varied by demographic and health-related characteristics, including age, race/ethnicity, and place of residence.

The rate of enrollment for all children under age 18 was not significantly different from that of all adults under age 65. However, privately insured people ages 55–64 were considerably less likely than those under 55 to be enrolled in an HMO. Only 36.9 percent of this older age group were enrolled in HMOs, compared to 46.2–51.7 percent of the younger age groups.

There were no significant differences in HMO enrollment by sex for all ages combined, but Table 2 shows some sex differences in HMO enrollment rates for age-sex groups. Women of childbearing age (19–44 years) were more likely than men that age to be enrolled in an HMO (51.0 percent vs. 47.0 percent).

Among the non-elderly privately insured population, a higher percentage of blacks and Hispanics than people in the white and other group were HMO members. Only 45.1 percent of privately insured whites and others were enrolled in an HMO, compared to 57.6 percent of blacks and 62.0 percent of Hispanics.

While HMO enrollment did not differ significantly by marital status, education level, or insurance status, it varied by poverty status. Nearly half (48.6 percent) of high-income people under age 65 were enrolled in HMOs, compared to 41.8 percent of people this age in poor or near-poor families.

Region of the country and degree of urbanization were associated with differences in the likelihood of HMO enrollment. Among privately insured Americans under age 65, people living in the Midwest were less likely than others to be enrolled in an HMO (37.8 percent) and people living in the West were more likely to be an HMO enrollee (59.9 percent). Those living in metropolitan statistical areas (MSAs) were much more likely to be HMO enrollees (51.6 percent) than those living outside of MSAs (29.3 percent).

Table 2 also shows that there were no significant differences in HMO enrollment among the non-elderly privately insured population by several health status measures. This finding is important, since many have speculated that HMOs are able to control costs by enrolling healthier people than those remaining in traditional indemnity plans. This finding that there is no difference in HMO enrollment by several health status measures supports other recent evidence of the lack of selection in HMO enrollment among the privately insured population under age 65 (Reschovsky, 1999/2000; Taylor, Beauregard, and Vistnes, 1995).

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Publicly Insured Non-Elderly

Table 3 presents enrollment in HMOs among the non-elderly population covered by public insurance only. It includes people enrolled in an HMO through Medicaid, Medicare, or other public programs that provide hospital and medical coverage but not people covered by CHAMPUS (Armed-Forces-related coverage). The table also shows data separately for those enrolled through Medicaid. Among publicly insured Americans, a higher percent of children (40.0 percent) than adults ages 19–64 (30.1 percent) were enrolled in an HMO through Medicaid. Breaking this down further, adults over age 44 were much less likely than younger adults to be HMO members, while younger adults had an HMO enrollment rate similar to that of children.

Although there were no significant differences in HMO membership for publicly insured non-elderly Americans by sex, differences can be seen for age-sex groups. Among the publicly insured population ages 19–44, women were much more likely than men to be enrolled in any HMO (42.4 percent compared to 28.2 percent).

Race/ethnicity, poverty status, and marital status did not significantly affect the rates of participation in HMOs among the publicly insured population. There were, however, differences by education level and type of public coverage. People who had not graduated from high school were less likely to be enrolled in an HMO than those with a high school education (28.0 percent vs. 37.9 percent). In terms of insurance status, people with Medicaid only were much more likely to be enrolled in an HMO (39.0 percent) than either those with Medicare only (11.7 percent) or those with Medicare plus Medicaid (20.8 percent).

Among non-elderly Americans, regional patterns in HMO enrollment among the publicly insured were similar to patterns among the privately insured, with those living in the West more likely to be HMO members (49.2 percent) than those in the South (27.3 percent) or the Northeast (34.7 percent). Overall, publicly insured people living in metropolitan areas were much more likely than those living elsewhere to be enrolled in an HMO (40.4 percent vs. 24.0 percent), and this pattern also held for Medicaid recipients considered separately.

One of the important differences in HMO enrollment patterns between the privately insured and publicly insured non-elderly population is in health status. The privately insured population showed no differences in HMO enrollment by health status, but the publicly insured non-elderly population showed significant differences by several health status measures. HMO enrollment was higher for people in excellent or very good health (40.0 percent) and good health (38.6 percent) than for people in fair health (26.3 percent) or poor health (26.9 percent). Similarly, people with excellent or very good mental health were more likely than people with fair or poor mental health to be enrolled in an HMO (39.6 percent vs. 26.5 percent). Publicly insured people who did not need assistance with activities of daily living (ADLs) or instrumental activities of daily living (IADLs) were more likely to be enrolled in an HMO than those who did need such assistance ( 37.5 percent vs. 24.7 percent). People who did not have any health limitations that affected work, housework, or school were more likely than those with limitations to be enrolled in an HMO ( 38.4 percent vs. 24.8 percent).

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Elderly Medicare Enrollees

Table 4 presents estimates of HMO enrollment for the Medicare-insured population age 65 and over. Elderly people without Medicare coverage are not included. The table presents separate statistics on HMO enrollment through private insurance and HMO enrollment through Medicare. A person can be enrolled in an HMO directly through Medicare as part of the Medicare + Choice program. Another way a Medicare recipient can be enrolled in an HMO is through a supplemental insurance policy, sometimes called a Medigap plan, or through a retirement health plan offered by a former employer. This is an important distinction because about 61.5 percent of Medicare beneficiaries held private coverage in addition to their Medicare coverage in 1996 (Vistnes and Monheit, 1997). Twenty percent of all elderly noninstitutionalized Medicare beneficiaries, or 6.2 million people, were enrolled in an HMO through any source of insurance. About 14.3 percent of all beneficiaries, or 4.5 million people, were enrolled in an HMO through Medicare coverage.

HMO enrollment through Medicare and HMO enrollment through private insurance have slightly different patterns by age group. While there were no significant differences in Medicare HMO enrollment by age group, Table 4 shows that younger beneficiaries were more likely than older beneficiaries to be enrolled in an HMO through private insurance (13.4 percent of beneficiaries ages 65–74 vs. 7.4 percent for ages 75–84 and 6.8 percent for age 85 and over). Similarly, beneficiaries ages 65–74 were more likely than those in older age groups to be enrolled in an HMO through either source of insurance. There are no significant differences by sex or age-sex groups.

Almost a third of Hispanics (32.3 percent) were enrolled in any HMO (Medicare or private insurance enrollment). This is significantly higher than overall HMO enrollment rates among blacks (20.6 percent) and the white and other group (19.3 percent).

Low-income, middle-income, and high-income elderly Medicare beneficiaries were more likely than poor and near-poor beneficiaries to be enrolled in any HMO. Among poor or near-poor beneficiaries, 15.5 percent were enrolled in an HMO, compared to 24.4 percent of low-income, 22.6 percent of middle-income, and 21.2 percent of high-income beneficiaries. Limiting the focus to Medicare HMOs, a similar pattern existed. Only 11.7 percent of poor and near-poor beneficiaries were enrolled in Medicare HMOs, compared with 18.3 percent of low-income and 17.3 percent of middle-income beneficiaries. There were no differences in HMO enrollment rates by education level or marital status.

In 1996 enrolling in a Medicare HMO often meant extra benefits, such as prescription drug coverage, which could save beneficiaries the cost of a supplemental Medigap policy. Thus, it is not surprising that the highest Medicare HMO enrollment rate (20.6 percent) was among beneficiaries with Medicare only (no private or public supplemental insurance). This rate was higher than the HMO enrollment rates of 10.3 percent for beneficiaries with Medicare and Medicaid and 12.2 percent for beneficiaries with Medicare and private insurance.

Regional differences in HMO enrollment for elderly Medicare beneficiaries followed patterns similar to those of younger populations. HMO enrollment was most common in the West, where 40.4 percent of Medicare beneficiaries were enrolled in an HMO. Similarly, residents of metropolitan areas were more likely to be enrolled in an HMO than those living in nonurban areas (24.0 vs. 6.8 percent).

Health status differences are of particular concern for Medicare HMOs because the Health Care Financing Administration did not adjust payments to HMOs for such differences in 1996. Among all Medicare beneficiaries age 65 and over, there were no significant differences in the rates of enrollment in Medicare HMOs by general perceived health status or by mental health status. However, looking at enrollment in private HMOs shows that Medicare beneficiaries in fair health were less likely than those in very good and excellent health to be enrolled. In addition, both Medicare and private HMO enrollment rates show significant differences by need for ADL or IADL assistance and by work or housework limitations. Beneficiaries who required assistance with ADL or IADL activities were less likely to be enrolled in an HMO through Medicare (8.7 percent) or through private insurance (6.1 percent) than those who did not require such assistance (15.3 and 11.6 percent, respectively). Similarly, beneficiaries with limitations in the ability to do work or housework were less likely to enroll in an HMO through Medicare (10.3 percent) or through private insurance (7.5 percent) than those without such limitations (15.7 and 11.9 percent, respectively).

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Conclusion

HMO enrollment grew rapidly in the last decade, to the point that 91.6 million people were enrolled in the first half of 1996. This figure represents 41.9 percent of the total insured population for that year. Although HMOs were commonplace in 1996, there were significant differences in HMO enrollment by insurance status, age group, race/ethnicity, poverty status, and geographic area. Enrollment rates were higher among the privately insured than the publicly insured and higher among children and younger adults than older adults. Women of childbearing age were more likely than men of the same age to be enrolled in an HMO. Hispanics and blacks were more likely than whites and persons of other races to be enrolled in an HMO. In addition, middle- and high-income people were more likely than poor, near-poor, or low-income people to be enrolled in an HMO. Within the publicly insured population, there were some health status differences in HMO enrollment. Among the population with Medicaid or Medicare, people who needed assistance with ADL or IADL activities or who were limited in their ability to work were less likely than other Medicaid or Medicare enrollees to be enrolled in an HMO. Across all insurance groups, HMO enrollment was higher in the West and in urban areas than in other locations.

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References

American Association of Health Plans. Managed care facts. Washington (DC); 1998.

Cohen J. Design and methods of the Medical Expenditure Panel Survey Household Component. Rockville (MD): Agency for Health Care Policy and Research; 1997. MEPS Methodology Report No. 1. AHCPR Pub. No. 97–0026.

Cohen JW, Monheit AC, Beauregard KM, et al. The Medical Expenditure Panel Survey: a national health information resource. Inquiry 1996;33:373–89.

Cohen S. Sample design of the 1996 Medical Expenditure Panel Survey Household Component. Rockville (MD): Agency for Health Care Policy and Research; 1997. MEPS Methodology Report No. 2. AHCPR Pub. No. 97–0027.

Eppig F. Personal communication from Franklin Eppig, Health Care Financing Administration, to Jessica Banthin, Agency for Healthcare Research and Quality; 1998 Mar 10.

Kerwin, J, Cantor D, Sheridan S. Results of Rounds 3 and 4 of managed care cognitive interviews for the household portion of NMES. Westat Deliverable #1.4.3. March 6, 1995.

The Centers for Medicare and Medicaid Services. Medicaid information page [cited 1999 Mar 4]. Available from: URL: http://www.cms.hhs.gov/medicaid/default.asp

Interstudy. HMO industry report 8.2 press release [cited 1998 Nov 12]. 

Reschovsky JD. Do HMOs make a difference? Data and methods. Inquiry 1999/2000;36(4):378–89.

Taylor AK, Beauregard KM, Vistnes JP. Who belongs to HMOs: a comparison of fee-for-service versus HMO enrollees. Medical Care Research and Review 1995;22(3):389–408.

Vistnes JP, Monheit AC. Health insurance status of the civilian noninstitutionalized population: 1996. Rockville (MD): Agency for Health Care Policy and Research; 1997. MEPS Research Findings No. 1. AHCPR Pub. No. 97–0030.

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Tables

Tables showing HMO enrollment as a percent of total insured for:

1. All types of insurance, all ages   3. Publicly insured, under 65
2. Privately insured, under 65 4. Medicare beneficiaries, 65 and over

Table 1. Health maintenance organization (HMO) enrollment as a percent of total insured: United States, first half of 1996

Demographic Characteristics
Number in thousands
Percent enrolled in HMOs
Total population 263,516 34.8
Insured population a
Total insured population a 218,760 41.9
Age in years    
18 and under 62,912 46.8
19-64 124,279 45.0
Total under 65 187,191 45.6
65 and over 31,568 20.1
Sex    
Female 114,319 42.1
Male 104,440 41.7
Race/ethnicity    
Hispanic b 18,886 51.6
Black 25,407 47.2
White and other 174,466 40.1
Poverty Status c    
Poor/near poor 34,762 32.7
Low income 28,570 37.0
Middle income 74,561 43.4
High income 80,867 45.6

a Includes all persons covered by private insurance, Medicaid, Medicare, CHAMPUS /CHAMPVA (Armed-Forces-related coverage), and other public hospital/physician coverage.
b Includes Hispanics of all races; the other race/ethnicity categories exclude Hispanics.
c Limited to persons insured in Round 1 who reported annual family income. Poor indicates family income is less than 100 percent of the poverty line, near poor indicates family income is 100 to less than 125 percent of poverty, low income indicates family income is 125 to less than 200 percent of poverty, middle income indicates family income is 200 to less than 400 percent of poverty, and high income indicates family income is 400 percent or more of poverty.

Source: Center for Financing, Access, and Cost Trends, Agency for Healthcare Research and Quality: Medical Expenditure Panel Survey Household Component, 1996 (Round 1).

Table 2. Privately insured population under age 65Health maintenance organization (HMO) enrollment as a percent of total insured, by sociodemographic characteristics: United States, first half of 1996

Sociodemographic Characteristics

Privately insured population in thousands
Percent enrolled in HMOs
Total
159,235
47.6
All children 18 years and under
47,730
49.5
All adults 19-64 years
111,504
46.8
Age in years
Under 5
14,834
51.7
6-12
18,054
50.3
13-18
14,843
46.5
19-24
11,563
46.5
25-34
27,698
50.0
35-44
32,049
49.2
45-54
24,785
46.2
55-64
15,410
36.9
Sex
Female
80,646
48.6
Male
78,589
46.6
Sex by Age
Female, 19-44
36,608
51.0
Female, 45-64
20,678
42.9
Male, 19-44
34,702
47.0
Male, 45-64
19,517
42.3
Race/ethnicity
Hispanic a
11,998
62.0
Black
15,124
57.6
White
132,112
45.1
Poverty Status b
Poor/near poor
10,295
41.8
Low income
17,101
43.4
Middle income
60,874
47.6
High income
Education Level c
Less than high school grad
10,266
45.1
High school grad
36,876
44.7
Some college
29,535
49.6
College degree or more
34,452
47.0
Marital Status
Marriedc
73,748
45.7
Widowed, divorced, or separated
14,199
50.1
Never married
23,455
48.0
Insurance status
Private only
154,106
47.7
Private plus public
5,128
43.6
Region
Northeast
32,113
51.2
Midwest
40,163
37.8
South
53,029
44.9
West
33,929
59.9
Metropolitan statistical area (MSA)
MSA
130,693
51.6
Non-MSA
28,542
29.3
Perceived health status
Excellent or very good
118,375
47.3
Good
30,868
48.5
Fair
7,709
48.1
Poor
2,168
46.8
Perceived mental health status
Excellent or very good
131,730
47.5
Good
23,081
47.6
Fair or poor
4,276
51.9
IADL or ADL assistance d
Needs assistance
1,769
40.3
No assistance needed
157,466
47.7
Limitationse
Any limitation
5,129
43.3
No limitation
141,856
47.4

a Includes Hispanics of all races; the other race/ethnicity categories exclude Hispanics.
b Limited to persons insured in Round 1 who reported annual family income. Poor indicates family income is less than 100 percent of the poverty line, near poor indicates family income is 100 to less than 125 percent of poverty, low income indicates family income is 125 to less than 200 percent of poverty, middle income indicates family income is 200 to less than 400 percent of poverty, and high income indicates family income is 400 percent or more of poverty.
c Age 19 and over.
d Needs help in one or more instrumental activities of daily living (such as shopping) or activities of daily living (such as bathing).
e Includes limitations in work, school, and housework for persons age 5 and over.

Source: Center for Financing, Access, and Cost Trends, Agency for Healthcare Research and Quality: Medical Expenditure Panel Survey Household Component, 1996 (Round 1).

Table 3. Publicly insured population under age 65Health maintenance organization (HMO) enrollment as a percent of total insured, by sociodemographic characteristics: United States, first half of 1996

Sociodemographic Characteristics

Publicly insured population in thousands
Percent enrolled in any HMOs
Percent Enrolled in HMO through Medicaid
Total 26,131 36.5 35.6
All children 18 years and under 14,460 40.1 40.0
All adults 19-64 years 11,671 32.2 30.1
Age in years      
Under 5 5,854 40.3 40.2
6-12 5,630 42.3 42.1
13-18 2,976 65.4 35.4
19-24 1,743 41.7 40.7
25-34 3,068 34.0 33.5
35-44 2,946 38.6 38.0
45-54 1,998 22.9 18.3
55-64 1,917 20.4 15.4
Sex      
Female 14,262 36.9 35.9
Male 11,869 36.0 35.2
Sex by Age      
Female, 19-44 5,069 42.4 41.6
Female, 45-64 2,177 22.9 18.2
Male, 19-44 2,687 28.2 27.7
Male, 45-64 1,737 20.2 15.3
Race/ethnicity      
Hispanic a 5,300 35.0 34.4
Black 7,427 36.8 36.7
White 13,404 37.0 35.4
Poverty Status b      
Poor/near poor 18,352 34.1 33.5
Low income 4,168 34.9 33.3
Middle income 2,376 38.5 36.5
High income 1,217 44.4 42.2
Education Level c      
Less than high school graduate 5,010 28.0 26.3
High school grad 4,224 37.9 35.5
Some college or more 2,281 31.2 29.5
Marital Status      
Marriedc 3,883 34.9 31.8
Widowed, divorced, or separated 3.636 32.9 30.6
Never married 4,153 29.0 28.1
Insurance status      
Medicaid only 23,328 39.0 39.0
Medicare only 1,586 11.7 0.0
Medicaid plus Meidcare 1,217 20.8 15.2
Region      
Northeast 5,312 34.7 33.7
Midwest 5,207 36.3 34.9
South 8,526 27.3 26.6
West 7,085 49.2 48.2
Metropolitan statistical area (MSA)      
MSA 19,976 40.4 39.3
Non-MSA 6,154 24.0 23.6
Perceived health status      
Excellent or very good 13,097 40.0 39.6
Good 7,065 38.6 38.1
Fair 3,693 26.3 24.8
Poor 2,187 26.9 21.6
Perceived mental health status      
Excellent or very good 15,901 39.6 38.9
Good 6,634 34.5 33.1
Fair or poor 3,507 26.5 25.4
IADL or ADL assistance d      
Needs assistance 1,983 24.7 21.0
No assistance needed 24,148 37.5 36.8
Limitationse      
Any limitation 4,450 24.8 20.6
No limitation 16,723 38.4 38.0

a Includes Hispanics of all races; the other race/ethnicity categories exclude Hispanics.
b Limited to persons insured in Round 1 who reported annual family income. Poor indicates family income is less than 100 percent of the poverty line, near poor indicates family income is 100 to less than 125 percent of poverty, low income indicates family income is 125 to less than 200 percent of poverty, middle income indicates family income is 200 to less than 400 percent of poverty, and high income indicates family income is 400 percent or more of poverty.
c Age 19 and over.
d Needs help in one or more instrumental activities of daily living (such as shopping) or activities of daily living (such as bathing).
e Includes limitations in work, school, and housework for persons age 5 and over.

Source: Center for Financing, Access, and Cost Trends, Agency for Healthcare Research and Quality: Medical Expenditure Panel Survey Household Component, 1996 (Round 1).

Table 4. Medicare beneficiaries age 65 and older—Health maintenance organization (HMO) enrollment as a percent of total insured by sociodemographic characteristics: United States, first half of 1996

Sociodemographic Characteristics

Elderly Medicare population in thousands
Percent enrolled in any HMO
Percent enrolled in Medicare HMO
Percent enrolled in private HMO
Total
31,171
20.0
14.3
10.8
Age in years
 
 
 
 
65-74
17,709
23.2
15.7
13.4
75-84
10,931
16.2
12.8
7.4
85 and older
2,531
13.8
11.0
6.8
Sex
Female
18,210
19.7
14.2
9.9
Male
12,961
20.3
14.6
12.1
Sex by Age
Female, 65-74
9,830
22.9
15.5
11.8
Female, 75 and over
8,379
16.0
12.6
7.6
Male, 65-74
7,878
23.5
16.0
15.5
Male, 75 and over
5,083
15.4
12.4
6.8
Race/ethnicity
Hispanic a
1,419
32.3
23.0
7.8
Black
2,613
20.6
13.4
8.7
White and other
27,139
19.3
14.0
11.1
Poverty Status b
Poor/near poor
6,232
15.5
11.7
5.4
Low income
6,945
24.4
18.3
14.0
Middle income
10,406
22.6
17.3
13.5
High income
7,588
21.2
14.3
12.2
Education Level
Less than high school graduate
11,976
18.9
14.0
8.4
High school graduate
10,137
20.5
14.8
12.1
Some college
4,147
23.3
17.3
14.8
College degree or more
4,276
19.4
12.0
11.0
Marital Status
Married
17,383
20.4
14.4
12.1
Not marriedc
13,756
19.5
14.3
9.2
Insurance status
Medicare only
8,744
20.6
20.6
0.0
Medicare plus other public
3,223
15.8
10.3
0.0
Medicare plus private
19,204
20.4
12.2
17.5
Region
Northeast
6,723
17.1
11.9
8.1
Midwest
7,669
14.5
8.4
8.8
South
10,904
14.6
9.1
6.8
West
5,875
40.4
34.7
23.7
Metropolitan statistical area (MSA)
MSA
23,848
24.0
17.6
13.0
Non-MSA
7,322
6.8
3.8
3.7

Table 4b

a Includes Hispanics of all races; the other race/ethnicity categories exclude Hispanics.
b Limited to persons insured in Round 1 who reported annual family income. Poor indicates family income is less than 100 percent of the poverty line, near poor indicates family income is 100 to less than 125 percent of poverty, low income indicates family income is 125 to less than 200 percent of poverty, middle income indicates family income is 200 to less than 400 percent of poverty, and high income indicates family income is 400 percent or more of poverty.
c Includes widowed, divorced, separated, and never married.
d Needs help in one or more instrumental activities of daily living (such as shopping) or activities of daily living (such as bathing).
e Includes limitations in work, school, and housework.

Note: A person can be enrolled in an HMO directly through Medicare as part of the Medicare + Choice program. Such people are said to be enrolled in Medicare HMOs. Another way a Medicare recipient can be enrolled in an HMO is through a supplemental insurance policy, sometimes called a Medigap plan, or through a retirement health plan offered by a former employer.

Source: Center for Financing, Access, and Cost Trends, Agency for Healthcare Research and Quality: Medical Expenditure Panel Survey Household Component, 1996 (Round 1).

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Technical Appendix  

Survey Design   Health Status
Health Insurance Status Sample Design and Accuracy of Estimates
Population Characteristics Rounding
HMO Enrollment: MEPS Estimates Compared With Others  

The data in this report were obtained in the first round of interviews for the Household Component (HC) of the 1996 Medical Expenditure Panel Survey (MEPS). MEPS is cosponsored by the Agency for Healthcare Research and Quality (AHRQ) and the National Center for Health Statistics (NCHS). The MEPS HC is a nationally representative survey of the U.S. civilian noninstitutionalized population that collects medical expenditure data at both the person and household levels. The focus of the MEPS HC is to collect detailed data on demographic characteristics, health conditions, health status, use of medical care services, charges and payments, access to care, satisfaction with care, health insurance coverage, income, and employment. In other components of MEPS, data are collected on residents of licensed or certified nursing homes and from the supply side of the health insurance market.

Survey Design

The sample for the 1996 MEPS HC was selected from respondents to the 1995 National Health Interview Survey (NHIS), which was conducted by NCHS. NHIS provides a nationally representative sample of the U.S. civilian noninstitutionalized population and reflects an oversampling of Hispanics and blacks. The MEPS HC collects data through an overlapping panel design. In this design, data are collected through a precontact interview that is followed by a series of five rounds of interviews over 2 1/2 years. Interviews are conducted with one member of each family, who reports on the health care experiences of the entire family. Two calendar years of medical expenditure and utilization data are collected from each household and captured using computer-assisted personal interviewing (CAPI). This series of data collection rounds is launched again each subsequent year on a new sample of households to provide overlapping panels of survey data that will provide continuous and current estimates of health care expenditures. The reference period for Round 1 of the MEPS HC was from January 1, 1996, to the date of the first interview, which occurred during the period from March through July 1996.

Health Insurance Status

The household respondent was asked if, between January 1, 1996, and the time of the Round 1 interview, anyone in the family was covered by any of several sources of public and private health insurance coverage. For this report, Medicare and CHAMPUS/CHAMPVA coverage represent coverage as of the date of the Round 1 interview. (CHAMPUS and CHAMPVA are the Civilian Health and Medical Programs for the Uniformed Services and Veterans Affairs.) All other sources of insurance represent coverage at any time during the Round 1 reference period. For additional details on health insurance status measures in MEPS, see Vistnes and Monheit (1997). Public Coverage

For this report, individuals are considered to have public coverage only if they met both of the following criteria:

  • They were not covered by private insurance.
  • They were covered by one of the following public programs: Medicare, Medicaid, or other public hospital/physician coverage.

For this report, persons with CHAMPUS are not included in this definition of public coverage because, due to a skip pattern in the MEPS instrument, they were not asked specifically about HMO coverage. Persons with CHAMPUS are not included in Tables 2, 3, or 4. In order to present a complete picture of insured persons, however, they are included in Table 1 along with all other insured persons. The Defense Department confirmed that for calendar year 1996 no one covered exclusively by CHAMPUS was enrolled in an HMO. Private Health Insurance

Private health insurance is defined for this report as insurance that provides coverage for hospital and physician care, including Medigap coverage. Insurance that provides coverage for a single service only, such as dental or vision coverage, is not counted. Total Insured

The total insured population shown in Table 1 includes persons covered by Medicare, Medicaid, other public hospital/physician programs, or private hospital/physician insurance at any time during the Round 1 reference period. For this table only, persons covered by CHAMPUS are also included. Individuals covered only by noncomprehensive State-specific programs (e.g., Maryland Kidney Disease Program) or private single-service plans (e.g., coverage for dental or vision care only, coverage for accidents or specific diseases) are not considered to be insured. HMO Enrollment Status

The Agency for Healthcare Research and Quality used cognitive interviewing methods to develop a series of questions for the MEPS HC on the managed care characteristics of health insurance coverage. Open-ended semi-structured interviews were administered to a total of approximately 100 respondents through four rounds of question development and refinement. Respondents included privately and publicly insured individuals with a variety of managed care type plans. Answers concerning health plan type were validated by obtaining the health plan information from employers or other sources. Further details of the cognitive testing are described in Kerwin, Cantor, and Sheridan (1995).

Cognitive pretesting confirmed that household survey respondents were often unable to identify their health plan's type according to a standard descriptive name or acronym, such as: PPO (preferred provider organization), POS (point-of-service plan), EPO (exclusive provider organization), and IPA (independent practice association). Only one acronym, "HMO," and its definition as a health maintenance organization was reliably understood by a majority of respondents included in the pretest sample. As a result of the cognitive pretesting, the MEPS HC includes a series of questions on HMO status and managed care characteristics of health plans. These questions are administered to MEPS household respondents during the first round of each panel (and whenever there has been a change in insurance coverage), with separate questions for private, Medicaid, and Medicare plans.

In this report HMO enrollees are distinguished from all non-HMO enrollees. Distinctions between PPO, POS, and other types of managed care plans are not made.

Table A

a Includes all persons covered by private insurance, Medicaid, Medicare, CHAMPUS/CHAMPVA (Armed-Forces-related coverage), and other public hospital/physician coverage.
b Includes Hispanics of all races; the other race/ethnicity categories exclude Hispanics.
c Limited to persons insured in Round 1 who reported annual family income. Poor indicates family income is less than 100 percent of the poverty line, near poor indicates family income is 100 to less than 125 percent of poverty, low income indicates family income is 125 to less than 200 percent of poverty, middle income indicates family income is 200 to less than 400 percent of poverty, and high income indicates family income is 400 percent or more of poverty.

Source: Center for Financing, Access, and Cost Trends, Agency for Healthcare Research and Quality: Medical Expenditure Panel Survey Household Component, 1996 (Round 1).

Table B

a Includes Hispanics of all races; the other race/ethnicity categories exclude Hispanics.
b Limited to persons insured in Round 1 who reported annual family income. Poor indicates family income is less than 100 percent of the poverty line, near poor indicates family income is 100 to less than 125 percent of poverty, low income indicates family income is 125 to less than 200 percent of poverty, middle income indicates family income is 200 to less than 400 percent of poverty, and high income indicates family income is 400 percent or more of poverty.
c Age 19 and over.
d Needs help in one or more instrumental activities of daily living (such as shopping) or activities of daily living (such as bathing).
e Includes limitations in work, school, and housework for persons age 5 and over.

Source: Center for Financing, Access, and Cost Trends, Agency for Healthcare Research and Quality: Medical Expenditure Panel Survey Household Component, 1996 (Round 1).

Table C

a Includes Hispanics of all races; the other race/ethnicity categories exclude Hispanics.
b Limited to persons insured in Round 1 who reported annual family income. Poor indicates family income is less than 100 percent of the poverty line, near poor indicates family income is 100 to less than 125 percent of poverty, low income indicates family income is 125 to less than 200 percent of poverty, middle income indicates family income is 200 to less than 400 percent of poverty, and high income indicates family income is 400 percent or more of poverty.
c Age 19 and over.
d Needs help in one or more instrumental activities of daily living (such as shopping) or activities of daily living (such as bathing).
e Includes limitations in work, school, and housework for persons age 5 and over.

Source: Center for Financing, Access, and Cost Trends, Agency for Healthcare Research and Quality: Medical Expenditure Panel Survey Household Component, 1996 (Round 1). Private Insurance HMO Enrollment

A person covered by private insurance was classified as being covered by an HMO if any of the three following conditions were met:

  • The person reported purchasing his/her insurance directly through an HMO.
  • A person reporting private insurance coverage identified the type of insurance company as an HMO.
  • The person answered yes to the following question:

    Now I will ask you a few questions about how (POLICYHOLDER)'s health insurance through (ESTABLISHMENT) works for non-emergency care.
    We are interested in knowing if (POLICYHOLDER)'s (ESTABLISHMENT) plan is an HMO, that is, a health maintenance organization. With an HMO, you must generally receive care from HMO physicians. For other doctors, the expense is not covered unless you were referred by the HMO or there was a medical emergency. Is (POLICYHOLDER)'s (INSURER NAME) an HMO?
Public Insurance HMO Enrollment Excluding Medicare

A person covered by Medicaid or by some other public program (other than Medicare) that provides hospital/physician insurance coverage was classified as having HMO coverage if either of the following conditions was met:

  • The person picked his or her plan from a list of Medicaid HMOs in the area.
  • The person answered yes to the following question:

    Under {{Medicaid/{STATE NAME FOR MEDICAID}}/the program sponsored by a State or local government agency which provides hospital and physician benefits} (are/is) (READ NAME(S) FROM BELOW) signed up with an HMO, that is, a health maintenance organization?

    [With an HMO, you must generally receive care from HMO physicians. If another doctor is seen, the expense is not covered unless you were referred by the HMO, or there was a medical emergency.]
Medicare HMO Enrollment

A person can be enrolled in an HMO directly through Medicare as part of the Medicare + Choice program. Such people are said to be enrolled in Medicare HMOs. Another way a Medicare recipient could be enrolled in an HMO is through a supplemental insurance policy, sometimes called a Medigap plan, or through a retirement health plan offered by a former employer.

A person covered by Medicare was classified as being covered by an HMO if either of the following conditions was met:

  • The person identified his or her plan from a list of Medicare HMOs in the area.
  • The person answered yes to either of the following questions:
    1. Now I will ask you a question about how (PERSON)'s Medicare works for non-emergency care. (When answering this question, please include only insurance from Medicare, not any privately purchased insurance.)

      (Are/is) (PERSON) signed up with an HMO, that is, a health maintenance organization? With an HMO, you generally receive care from HMO physicians.
    1. Does Medicare require (PERSON) to sign up with a certain primary care doctor, group of doctors, or with a certain clinic which he or she must go to for all routine care?

Medicare beneficiaries with additional private insurance may be enrolled in an HMO through either Medicare or the private insurance. They were administered the sets of managed care questions for both private insurance and Medicare. It is possible that Medicare beneficiaries with both private and Medicare coverage may confuse the source of their HMO coverage.

Population Characteristics

All population characteristics used in this report come from the 1996 MEPS HC Round 1 data collection effort except for poverty status, which comes from data collected in Round 3 as explained below. Age

The respondent was asked to report the age of each family member as of the date of the Round 1 interview. Race/Ethnicity

Classification by race and ethnicity is based on information reported for each family member. Respondents were asked if the race of the sample person was best described as American Indian, Alaska Native, Asian or Pacific Islander, black, white, or other. In this report, American Indian, Alaska Native, Asian, and Pacific Islander are included together with white in the category labeled "white and other."

Respondents also were asked if the sample person's main national origin or ancestry was Puerto Rican; Cuban; Mexican, Mexicano, Mexican American, or Chicano; other Latin American; or other Spanish. All persons whose main national origin or ancestry was reported in one of these Hispanic groups, regardless of racial background, were classified as Hispanic. Since the Hispanic grouping can include black Hispanic, white Hispanic, and other Hispanic, the race categories of black, white, and other do not include Hispanic persons. Region and Place of Residence

Individuals were identified as residing in one of four main regions—Northeast, Midwest, South, and West—in accordance with the U.S. Bureau of the Census definition. Place of residence either inside or outside a metropolitan statistical area (MSA) was defined according to the U.S. Office of Management and Budget designation, which applied 1990 standards using population counts from the 1990 U.S. census. An MSA is a large population nucleus combined with adjacent communities that have a high degree of economic and social integration with the nucleus. Each MSA has one or more central communities containing the area's main population concentration. In New England, metropolitan areas consist of cities and towns rather than whole counties. Poverty Status

Unlike the other demographic characteristics used in this study, which are drawn from the Round 1 interview, poverty status comes from 1996 family income data collected in Round 3. For sections of Tables 1–4 showing HMO enrollment by poverty status, the sample was limited to persons insured in Round 1 who also reported on sources of income in Round 3. Population estimates were further poststratified to MEPS population estimates of the total insured population.

Family income was constructed by summing person-level total income for all members of the family. Person-level total income comprises annual earnings from wages, salaries, bonuses, tips, and commissions; business and farm gains and losses; unemployment and worker's compensation; interest and dividends; alimony, child support, and other private transfers; private pensions, IRA (individual retirement account) withdrawals, social security, and veterans' payments; Supplemental Security Income and cash welfare payments from public assistance, Aid to Families with Dependent Children, and Aid to Dependent Children; gains or losses from estates, trusts, partnerships, S corporations, rent, and royalties; and a small amount of "other" income. Logical editing or weighted, sequential hot-deck imputation was used to impute income amounts for missing values.

Poverty status is determined by dividing family income by the applicable poverty line (based on family size and composition). The resulting percentages are grouped into five categories: Poor indicates family income less than 100 percent of the poverty line; near poor indicates family income from 100 to less than 125 percent of poverty; low income indicates family income from 125 to less than 200 percent of poverty; middle income indicates family income from 200 to less than 400 percent of poverty; and high income indicates family income 400 percent of poverty or more.

Table D

a Includes Hispanics of all races; the other race/ethnicity categories exclude Hispanics.
b Limited to persons insured in Round 1 who reported annual family income. Poor indicates family income is less than 100 percent of the poverty line, near poor indicates family income is 100 to less than 125 percent of poverty, low income indicates family income is 125 to less than 200 percent of poverty, middle income indicates family income is 200 to less than 400 percent of poverty, and high income indicates family income is 400 percent or more of poverty.
c Includes widowed, divorced, separated, and never married.
d Needs help in one or more instrumental activities of daily living (such as shopping) or activities of daily living (such as bathing).

e Includes limitations in work, school, and housework.

Note: A person can be enrolled in an HMO directly through Medicare as part of the Medicare + Choice program. Such people are said to be enrolled in Medicare HMOs. Another way a Medicare recipient can be enrolled in an HMO is through a supplemental insurance policy, sometimes called a Medigap plan.

Source: Center for Financing, Access, and Cost Trends, Agency for Healthcare Research and Quality: Medical Expenditure Panel Survey Household Component, 1996 (Round 1).

Health Status

Perceived Health Status

Health status measures used in this report are from Round 1 of the 1996 MEPS HC. In every round of MEPS, the respondent is asked to rate the health of every member of the family. The exact wording of the question is as follows: "In general, compared to other people of (PERSON)'s age, would you say that (PERSON)'s health is excellent, very good, good, fair, or poor?" A similar question is asked about mental health status.

In order to generate the estimates presented in Tables 2, 3, and 4, it was assumed that nonrespondents to these questions were distributed across health states following the distribution of respondents. Assistance with ADLs and IADLs

Questions concerning the need for assistance in activities of daily living (ADLs) and in instrumental activities of daily living (IADLs) are asked in every round of MEPS. Limitations in the ability to perform IADLs are assessed by first asking the respondent a screening question: "Does anyone in the family receive help or supervision using the telephone, paying bills, taking medications, preparing light meals, doing laundry, or going shopping?" Limitations in the ability to perform ADLs are assessed with the following question: "Does anyone in the family receive help or supervision with personal care such as bathing, dressing, or getting around the house?" Follow-up questions are asked but are not used in this analysis. For this report, the responses to the two screening questions are combined into a single measure of need for any type of IADL or ADL assistance. Limitations in Work/School/Housework

These limitations include both paid work and unpaid housework, as well as limitations in the ability to attend school. The relevant question asks, "Is anyone in the family limited in any way in the ability to work at a job, do housework, or go to school because of an impairment or a physical or mental health problem?" (emphasis in the question as indicated).

Sample Design and Accuracy of Estimates

The sample selected for the 1996 MEPS, which was a subsample of the 1995 NHIS, was designed to produce national estimates that are representative of the civilian noninstitutionalized population of the United States. Round 1 data were obtained for approximately 9,400 households in MEPS—comprising 23,612 individuals—which results in a survey response rate of 78 percent. This figure reflects participation in both NHIS and MEPS.

The statistics presented in this report are affected by both sampling error and sources of nonsampling error, which include nonresponse bias, respondent reporting errors, and interviewer effects. For a detailed description of the MEPS survey design, the adopted sample design, and methods used to minimize sources of nonsampling error, see J. Cohen (1997), S. Cohen (1997), and Cohen, Monheit, Beauregard, et al. (1996). The MEPS person-level estimation weights include nonresponse adjustments and poststratification adjustments to population estimates derived from the March 1996 Current Population Survey based on cross-classifications by region, age, race/ethnicity, and gender.

Tests of statistical significance were used to determine whether the differences between populations exist at specified levels of confidence or whether they occurred by chance. Differences were tested using Z-scores having asymptotic normal properties at the 0.05 level of significance. Unless otherwise noted, only statistically significant differences between estimates are discussed in the text.

Rounding

Estimates presented in the tables were rounded to the nearest 0.1 percent. Standard errors, presented in Tables A–D, were rounded to the nearest 0.01. Therefore, some of the estimates for population totals of subgroups presented in the tables will not add exactly to the overall estimated population total. In addition, some of the estimates of total HMO enrollees presented in the text of this report cannot be derived precisely from the accompanying table because of the rounding of percents in the tables.

HMO Enrollment: MEPS Estimates Compared With Others

It is useful to compare MEPS estimates with other estimates of HMO enrollment. The American Association of Health Plans estimates that there were 67.5 million HMO enrollees in 1996, representing about one-quarter of the population (American Association of Health Plans, 1998). Estimates based on a census of all HMO companies showed 58.7 million HMO enrollees as of January 1, 1996 (Interstudy, 1998). The MEPS estimate of 91.6 million persons, or 34.8 percent of the total population, is higher than either of these figures. As noted earlier, the MEPS data are based on household respondents' understanding of HMO status, whereas both of these other estimates are based on surveys of HMO companies. It is possible that household respondents are over-reporting HMO enrollment, perhaps describing their preferred provider organization or other managed care plan as an HMO.

Administrative records of the number of Medicaid HMO enrollees are not directly comparable to estimates published in Table 3, which excludes the elderly and Medicaid-covered persons in institutions. Nonetheless, figures published by the Health Care Financing Administration (HCFA) provide a useful benchmark since most Medicaid HMO enrollees are in the community population. HCFA's administrative data show 8.6 million Medicaid managed care enrollees as of June 1996, excluding persons enrolled in Primary Care Case Management and carve-out plans that do not provide a comprehensive set of benefits (Health Care Financing Administration, 1999). The MEPS estimate of 9.5 million HMO enrollees in Medicaid is 10 percent higher.

According to the 1995 Medicare Current Beneficiary Survey, there were 4.38 million HMO enrollees among the Medicare noninstitutionalized elderly population (Eppig, 1998), representing 13.9 percent of this population. These figures are directly comparable to those shown here: 4.46 million HMO enrollees (derived from Table 4), or 14.3 percent of the noninstitutionalized Medicare population age 65 and over (Table 4).

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Suggested Citation:
Banthin, J. S. and Taylor, A. K. Research Findings #15: HMO Enrollment in the United States: Estimates Based on Household Reports, 1996. January 2001. Agency for Healthcare Research and Quality, Rockville, MD. http://www.meps.ahrq.gov/data_files/publications/rf15/rf15.shtml