When employees are provided with information comparing the quality of health plans available to them, they are more likely to switch from low-quality to high-quality plans, according to a study supported by the Agency for Healthcare Research and Quality (National Research Service Award training grant T32 HS00055). Even after controlling for other plan characteristics, a higher quality-of-care rating was positively related to the probability of plan choice. Also, some employee characteristics appeared to be related to plan switching and the relative importance of different plan characteristics, notes Nancy Dean Beaulieu, Ph.D., of Harvard University.
Dr. Beaulieu's study of health plans offered by Harvard University analyzed the effects of providing performance data (ranging from ease of getting an appointment to preventive care) on six health plans offered to university employees on plan switching during the open enrollment period. The plans included health maintenance organizations (HMOs), preferred provider organizations, and independent practice associations. Harvard's contribution to plan premiums was a fixed percentage of the lowest-priced plan. The set of plans it offered allowed employees to choose higher rated quality at a lower price but at the expense of a more restricted provider network.
Age of the policyholder and type of policy purchased moderated the effects of plan characteristics on plan choice. For example, there were two groups of employees for whom a broader provider network was likely to be important: employees purchasing family policies and older employees. Families seemed to value the higher quality, lower price, and smaller network combination offered by certain HMOs in the study. Older families coped with smaller networks by selecting the point of service option more frequently. Younger individuals appeared to be the most price-sensitive of all and least concerned with provider networks.
More details are in "Quality information and consumer health plan choices," by Dr. Beaulieu, in the Journal of Health Economics 21, pp. 43-63, 2002.
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