This is almost certainly a major factor, but there are other possible explanations. Most important was nonelderly enrollment in managed care plans. The legislation not only created some volatility and uncertainty, which has contributed to slower enrollment growth, but payment reform also slowed the growth rate in high payment areas where most Medicare managed care enrollees live, as it raised rates in low rate areas where growth potential is limited. The market alone will not overcome the diseconomies of scale that characterize most rural areas. Rural operating margins are so narrow that some public investment will be necessary if we are to extend these benefits to all our nation's citizens regardless of place or circumstance.
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