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Employees use comparison data on health plans to avoid poorly rated plans and choose plans with lower out-of-pocket costs

When employees are provided with health plan report cards on the quality of plans they are offered, they are less likely to choose plans with high out-of-pocket costs, and they tend to avoid health plans with many below-average ratings, according to a recent study supported by the Agency for Healthcare Research and Quality (HS10050). Dennis Scanlon, Ph.D., of Penn State University, and his colleagues compared health plan choices of employees of a large corporation during open enrollment periods in 1996, when they received no health plan comparison (report card) data, and in 1997, when they did, while controlling for changes in out-of-pocket premiums to the employee.

Health plans were rated on six areas: quality of preventive care, medical and surgical care, women's health, access to care, patient satisfaction, and operational performance (based on site visits by corporate consultants). Results indicated that out-of-pocket price was inversely related to enrollment, but the researchers were unable to identify which of the six individual ratings influenced enrollment. However, employees consistently avoided plans with many below-average ratings relative to plans with many average ratings. For example, the estimated family coverage market share for a plan with four (of six) below average ratings was 28 percent, while the market share for a plan with no below average ratings was 39 percent.

The researchers note that their analysis was based only on employees who had opted to enroll in health maintenance organizations. Further analysis of the extent to which the ratings drew employees from fee-for-service and preferred provider organization plans is warranted, notes Dr. Scanlon.

See "The impact of health plan report cards on managed care enrollment," by Dr. Scanlon, Michael Chernew, Ph.D., Catherine McLaughlin, Ph.D., and Gary Solon, Ph.D., in the Journal of Health Economics 21, pp. 19-41, 2002.

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