Prepaid Medical Care and Hospital Utilization in a Dual Choice Situation

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Abstract
Comparison of the hospitalization experience of 2 population groups who were employed in the same industry but who received comprehensive medical care under 2 different pre-payment plans showed significantly different hospital admission rates. Under the 2 plans, GHI (Group Health Insurance) and HIP (Health Insurance Plan of Greater N. Y.), medical care coverage was essentially the same; however, medical care is received in GHI mainly from physicians in solo practice who are paid on a fee-for-service basis, and in HIP from medical groups paid on a capitation basis. The annual hospital admission rate, adjusted for differences in composition of the 2 study groups, was 20% lower for the HIP group (70.2/1000 population) than for the GHI group (88.3/1000 population). Analysis of adjusted data by sex showed that for females, who constituted the majority of the study population, the rates for both surgical and non-surgical hospital admissions were about 23% lower in HIP than in GHI. Average duration of hospital stay was essentially the same for the 2 study populations, but average number of paid days per 100 population, primarily reflecting the difference in admission rates, was 74.4 for HIP and 95.5 for GHI.

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