Group- and staff-model HMOs reduce the use of health services by nearly 20%, compared with typical fee-for-service indemnity plans, a new government study reports.
The study, by the Congressional Budget Office, said that overall, HMOs reduce the use of services by an average of about 8%.
Because administrative costs are likely to increase as HMO enrollment rises, and for other reasons, the CBO said it cannot conclude that HMO reductions in healthcare services imply lower healthcare costs.
But if administrative costs remained the same and effective HMOs were accessible to all, the CBO estimated that spending on insured services would have been lower by 16.6% nationwide. That's if all insured people had been enrolled in an effective HMO in 1990, and total national health expenditures would have been lower by 11.9%.
On average, independent practice-model HMOs do only slightly better than indemnity plans, the report said.
A typical indemnity plan has some elements of managed care, such as utilization review or a network of preferred providers.
Little information exists about the effects a point-of-service option would have on a plan's ability to control the use of healthcare services, the report said.