We use data across states to examine the relation between HMO enrollment and medical spending. We find that increased managed care enrollment significantly reduces hospital cost growth. Although increased spending on physicians offsets some of this effect, we generally find a significant...

We use data across states to examine the relation between HMO enrollment and medical spending. We find that increased managed care enrollment significantly reduces hospital cost growth. Although increased spending on physicians offsets some of this effect, we generally find a significant...