HMOs growing component of entitlement programs

Once a barely noticed market niche, HMO enrollment has grown dramatically amid the health care system’s massive restructuring. Medicare risk contracts grew from a 3.8% HMO enrollment rate in 1991 to 8.8% in 1995, according to the Physician Payment Review Commission’s 1996 annual report. In many states, laws now mandate that Medicaid beneficiaries enroll in an HMO. Among Medicaid beneficiaries, HMO enrollment has increased from 282,000 in 1981 to about 7.8 million in 1994, or about 23% of total Medicaid beneficiaries. (See chart above.)