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Health Care Costs and Financing

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Access to members' comparative ratings of health plans could affect consumers' choices of health plans

Employees are given comparative information on health plan performance by nearly one-quarter of the large employers that offer coverage choices. Several States have recently published report cards that compare plans based on surveys of plan members or the HEDIS performance measures developed by the National Committee for Quality Assurance. The Health Care Financing Administration is collecting and will publish survey information for every managed care plan that has a contract with Medicare. Finally, the Consumer Assessment of Health Plans Study (CAHPS®), developed by the Agency for Healthcare Research and Quality, soon will include a survey to measure quality of health plans from the consumer perspective, as well as tools for communicating survey results. CAHPS® ratings could affect consumer selection of health plans and ultimately contain costs, according to a study supported by the Agency for Healthcare Research and Quality (HS09204).

A sample of 311 privately insured adults from Los Angeles County reviewed materials on four hypothetical health plans and selected one plan. The health plans varied as to cost, coverage, type of plan, ability to keep one's doctor, and quality as measured by the CAHPS® survey. In the absence of CAHPS® information, 86 percent of consumers preferred plans that covered more services, even though they cost more. When CAHPS® information was provided, consumers shifted to less expensive plans covering fewer services if CAHPS® ratings identified those plans as higher quality (59 percent of consumers preferred plans covering more services). Consumer choices were unaffected when CAHPS® ratings identified the more expensive plans covering more services as higher quality (89 percent of consumers preferred plans covering more services).

There are some obvious benefits to presenting consumers with comparative health plan information, explains Ron D. Hays, Ph.D., of the University of California, Los Angeles School of Medicine. If consumers choose plans with higher ratings, enrollment will be concentrated in better plans, and more consumers will receive quality services. Also, plans have an incentive to improve their services and attract more members. Finally, consumers will be disposed to choose the plan that offers equal quality services at a lower price which, in turn, may encourage plans to operate more efficiently and compete on price.

See "Do consumer reports of health plan quality affect health plan selection?" by Mark Spranca, Ph.D., David E. Kanouse, Ph.D., Marc Elliott, Ph.D., and others, in the December 2000 Health Services Research 35(5), pp. 933-947.

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