Imagine that patients stay in HMO with capitation payments for two periods early in life (period 1) and later in life (period 2). The HMO may offer preventive care that costs $1,000 in period 1 and $500 in period 2 or no preventive care that costs $0 in period 1 but $2,500 in period 2. a. If a profit maximizing HMO knows that the patient will belong to the HMO in periods 1 and 2, which option will the HMO pick? Why? b. Suppose increased competition raises the disenrollment rate (the rate at which people leave an HMO for another plan). Explain how this might change the HMÓS decision?

Imagine that patients stay in HMO with capitation payments for two periods early in life (period 1) and later in life (period 2). The HMO may offer preventive care that costs $1,000 in period 1 and $500 in period 2 or no preventive care that costs $0 in period 1 but $2,500 in period 2. a. If a profit maximizing HMO knows that the patient will belong to the HMO in periods 1 and 2, which option will the HMO pick? Why? b. Suppose increased competition raises the disenrollment rate (the rate at which people leave an HMO for another plan). Explain how this might change the HMÓS decision?

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter6: Population Health

Section: Chapter Questions

Problem 2QAP

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