New Mexico is concerned about rising costs of health care for employees. Ten years ago, it shifted all employees to HMOs. Now it would like to evaluate the impact of the HMOs on the cost of health care to the state on a per-person basis. Average health care costs are the dependent variable in a time series analysis that covers the years 1940 to 2011. The three independent variables are X₁ (a trend variable, a counter starting at 1 for 1940 and increasing by one per year), X₂ (a variable coded 0 before the introduction of the HMOs and coded 1 afterward), and X₃ (a variable coded 0 before the introduction of the HMOs and coded as a counter afterward—for example, 1, 2, 3, 4, …). Costs are in dollars. Interpret the following regression, and present a brief analysis of the impact of the HMOs on the cost of health care. 

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Ŷ $45.00+ $51.45X₁ = 561 $123.69X₂ = 5.43 Sb₂ = 49.67 Sb3 = 1.14 R² = .99 Adj. R² = 98 - $7.25X3 = 93.50 Sylx