Health Maintenance Organization and the HMO Act of 1973

by E. E. Uylhara, Margaret Ann Thomas

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Abstract

Evaluates the impact of the Health Maintenance Act of 1973. First, the assumptions underlying the Act regarding the effectiveness of HMOs in controlling cost, maintaining the quality of care, and redistributing health resources, and the barriers to HMO development are examined by reviewing the existing literature. Second, the major components of the Act, namely the scope of benefits, the community rating, and the open-enrollment requirements are analyzed for the purpose of evaluating the ability of HMOs to compete in the market. The analysis views the HMO as an alternative to health insurance rather than the fee-for-service mode of delivering health care. The findings suggest that the present requirements of the HMO Act may not permit HMOs to become viable competitors in the health care insurance market.

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