Policy implications of startup utilization by enrollees in prepaid group plans.

  • 1 April 1984
    • journal article
    • Vol. 19  (1) , 23-40
Abstract
This article discusses several policy implications of the so-called startup effect, in which high initial health services utilization by new enrollees in prepaid group plans ( PGPs ) becomes reduced with the increasing duration of membership. Results of research in a developing PGP are analyzed as they relate to a mathematical model of startups for two measures of enrollee use. After estimating the total costs of startups in this setting, the motivating effects of such costs on PGPs are examined in relation to several policy issues--including the rate of PGP development in the United States, the use of financial incentives to enroll the elderly and medically disadvantaged, potential inequities of premium determination, the large impact of startups on disenrollment , and the federally mandated process of annual announcement of benefits and open enrollment. Ideas and mechanisms for future study on the startup effect and its policy implications are discussed.