Choosing a Health Care Provider: The Role of Quality Information

Reviews research on the adequacy of the information available on provider quality; the type of information consumers seek in choosing physicians, physician groups, and hospitals; and their attitudes about, awareness of, and use of that information

Using Survey Measures to Assess Risk Selection among Medicare Managed Care Plans

This paper quantifies risk selection among competing Medicare managed care plans, using beneficiary survey data from the Consumer Assessments of Health Plans Survey®. Selection, measured by variation in plan-level prevalence of health conditions and predicted costs, was substantial. A plan with moderate (one standard deviation) adverse selection would have predicted costs 11.6% above an average plan. Only a small part of this variation was explained by the geographical differences in the prevalence of health conditions among or within Metropolitan Statistical Areas, indicating that the selection was driven by plan attributes. Plans serving members with greater health needs have the potential to establish programs to serve these sick members well, yet this places plans at financial risk. Hence, improved risk adjustment for chronic conditions may be warranted. Moreover, survey measures have the potential to measure the prevalence of such conditions reliably and consistently across plans

Is the individual market more than a bridge market? An analysis of disenrollment decisions

The individual insurance market is perceived by many to provide primarily transition coverage, but there is limited research about how long people stay in this market and what affects their disenrollment decisions. We examine these issues using administrative records and survey data for those enrolled in the individual market in California. We conclude that there is less turnover in this market than is commonly believed. We find that economic factors and coverage characteristics are important in the decision to disenroll, but that perceptions about insurance and the health care system also affect this decision.California HealthCare Foundation (grant no. 01-1520

The costs of decedents in the medicare program: implications for payments to medicare+choice plans

Objective. To discuss and quantify the incentives that Medicare managed care plans have to avoid (through selective enrollment or disenrollment) people who are at risk for very high costs, focusing on Medicare beneficiaries in the last year of life—a group that accounts for more than one-quarter of Medicare's annual expenditures. Data Source. Medicare administrative claims for 1994 and 1995. Study Design. We calculated the payment a plan would have received under three risk-adjustment systems for each beneficiary in our 1995 sample based on his or her age, gender, county of residence, original reason for Medicare entitlement, and principal inpatient diagnoses received during any hospital stays in 1994. We compared these amounts to the actual costs incurred by those beneficiaries. We then looked for clinical categories that were predictive of costs, including costs in a beneficiary's last year of life, not accounted for by the risk adjusters. Data Extraction Methods. The analyses were conducted using claims for a 5 percent random sample of Medicare beneficiaries who died in 1995 and a matched group of survivors. Principal Findings. Medicare is currently implementing the Principal Inpatient Diagnostic Cost Groups (PIP-DCG) risk adjustment payment system to address the problem of risk selection in the Medicare+Choice program. We quantify the strong financial disincentives to enroll terminally ill beneficiaries that plans still have under this risk adjustment system. We also show that up to one-third of the selection observed between Medicare HMOs and the traditional fee-for-service system could be due to differential enrollment of decedents. A risk adjustment system that incorporated more of the available diagnostic information would attenuate this disincentive; however, plans could still use clinical information (not included in the risk adjustment scheme) to identify beneficiaries whose expected costs exceed expected payments. Conclusions. More disaggregated prospective risk adjustment methods and alternative payment systems that compensate plans for delivering care to certain classes of patients should be considered to ensure access to high-quality managed care for all beneficiaries

Using Contingent Choice Methods to Assess Consumer Preferences About Health Plan Design

Introduction: American insurers are designing products to contain healthcare costs by making consumers financially responsible for their choices. Little is known about how consumers will view these new designs. Our objective is to examine consumer preferences for selected benefit designs. Methods: We used the contingent choice method to assess willingness to pay for six health plan attributes. Our sample included subscribers to individual health insurance products in California, US. We used fitted logistic regression models to explore how preferences for the more generous attributes varied with the additional premium and with the characteristics of the subscriber. Results: High quality was the most highly valued attribute based on the amounts consumers report they are willing to pay. They were also willing to pay substantial monthly premiums to reduce their overall financial risk. Individuals in lower health were willing to pay more to reduce their financial risk than individuals in better health. Discussion/conclusion: Consumers may prefer tiered-benefit designs to those that involve overall increases in cost sharing. More consumer information is needed to help consumers better evaluate the costs and benefits of their insurance choices.Patient-preference, Willingness-to-pay

The role of product design in consumers' choices in the individual insurance market.

Objective. To evaluate the role of health plan benefit design and price on consumers' decisions to purchase health insurance in the nongroup market and their choice of plan. Data Sources and Study Setting. Administrative data from the three largest nongroup insurers in California and survey data about those insured in the nongroup market and the uninsured in California. Study Design. We fit a nested logit model to examine the effects of plan characteristics on consumer choice while accounting for substitutability among certain groups of products. Principal Findings. Product choice is quite sensitive to price. A 10 percent decrease in the price of a product would increase its market share by about 20 percent. However, a 10 percent decrease in prices of all products would only increase overall market participation by about 4 percent. Changes in the generosity of coverage will also affect product choice, but have only small effects on overall participation. A 20 percent decrease in the deductible or maximum out-of-pocket payment of all plans would increase participation by about 0.3–0.5 percent. Perceived information search costs and other nonprice barriers have substantial effects on purchase of nongroup coverage. Conclusions. Modest subsidies will have small effects on purchase in the nongroup market. New product designs with higher deductibles are likely to be more attractive to healthy purchasers, but the new benefit designs are likely to have only small effects on market participation. In contrast, consumer education efforts have a role to play in helping to expand coverage.Health insurance; Price elasticity; Subsidies;Insurance, Health; Insurance, Health--Premiums; Consumer behavior;