The determinants of HMO enrollment and growth.

This paper analyzes why HMO enrollment and growth have varied greatly among states. Using Tobit analysis, a number of variables are related to state HMO market share in 1976 and the change in HMO market share from 1966 to 1976. Higher hospital costs and mobile populations are shown to have encouraged HMO development. There is some evidence that the extent of unionization and the presence of group practices encourages HMO enrollment and growth. Legal restrictions on HMO development imposed at the state level appear to have had little effect upon HMOs. In particular, certificate-of-need laws have not impeded HMO enrollment and growth. Consequently, our results suggest that the enrollment and growth of HMOs respond more to impersonal market and demographic conditions than to certain legal restrictions.