es sense given the low use rate and the technological advances that are being made in the industry.
As the product enters a more mature phase of its life cycle, pricing will also become a key factor, and some companies are likely to continue the consolidation which has marked much of the industry during the early 1990s; Humana's acquisition of Emphesys is certainly in keeping with this strategy (Lewis, 1995, p. 669).
Health maintenance organizations also stand to benefit from the current legislative climate in which Congress has dictated that Medicare will reimburse a health maintenance organization 95 percent of average per capita Medicare cost in a given area. This is strong incentive for health maintenance organizations to court large employers, and employers are able to keep their costs down since the current climate essentially subsidizes services offered by the health maintenance organization on a regional or national basis (Novack, 1995, p. 50).
In 1993, the Financial Accounting Standards Board issued a new guideline which requires companies to book the cost of post-retirement medical benefits as they are earned by workers. In response to this, a number of employers began to require than future and even current retirees pay more of their own medical premiums. In 1994, the number of large employers who offered retired employees health maintenance organizations as an option for their medical services surged from 7 percent to 17 percent (Novack, 1995, p. 49).
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