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To the Editor: In examining the association between managed care market share and health care expenditures for fee-for-service Medicare patients, Dr Baker¹ finds a significant inverse association between systemwide health maintenance organization (HMO) market share and Medicare fee-for-service expenditures. Baker suggests that HMO activity may influence fee-for-service expenditures through 3 factors: availability of medical infrastructure and services, physicians' adoption of neighboring physicians' behaviors, and changes in traditionally nonmanaged care insurers as response to the presence of managed care. Furthermore, Baker theorizes that lower service prices contribute little to decreased overall costs.

We believe that information theory provides an alternative, possibly complementary, explanation. Information theory postulates that physicians' recommendations are, at least in part, a function of the physician utility ("happiness") function, the severity of the patient's illness, and the level of knowledge of the patient about his or her illness and its appropriate treatment.² Information theory further postulates that increases . . . [Full Text of this Article]

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Association of Managed Care Market Share and Health Expenditures for Fee-for-Service Medicare Patients
Laurence C. Baker
JAMA. 1999;281(5):432-437.
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