Estimating the influence of HMO/PPO market penetration on infant health outcomes in the United States: A longitudinal data analysis

Over the last decade, managed care has grown rapidly. While many studies have examined the relationship between managed care market growth and health care costs, and managed care market growth and health care utilization in the literature, very few studies have examined the relationship between managed care market growth and health outcomes. In this dissertation, I investigate the relationship between managed care market penetration and infant health outcomes using the framework of health production function. A 2SLS (two stage least square) fixed-effect model is developed to estimate the influence of managed care market penetration on infant health outcomes. In the first stage, the reduced form demand functions for inputs used in the production of healthy newborns are estimated. In the second stage, the predicated health inputs from the first stage are, along with other variables, are used to estimate a series of infant health production functions. This approach controls the problem that health inputs are endogenous, and generates consistent estimates of the parameters of the health production functions. Findings from this dissertation suggest that managed care market penetration has had positive effects on infant health outcomes. In addition, various forms of managed care, such as health maintenance organizations and preferred provider plans have had different effects on the demand for health inputs and on health outcomes.