Medicaid managed care and the marketplace.

In 1994 and 1995, Tennessee, Hawaii, Rhode Island, and Oklahoma began massive expansions of Medicaid managed care, growing from three health plans covering a few enrollees to 27 plans covering the great majority a year later. Some firms aggressively pursued expansion, while others had very limited business objectives. Although established insurers often dominated the Medicaid markets, newly developed firms, some provider-sponsored, were also important. Despite the relatively low Medicaid capitation rates in the 1996-97 period, Medicaid plans in three states had an average 1% net profit margin.