Health Plan and Tier Switching: A Natural Experiment

University Of Michigan At Ann Arbor, Ann Arbor MI

Investigators

Linked publications & trials

Abstract

DESCRIPTION (Provided by applicant): Access to health care in the U.S. is heavily tied to employment. As health care costs have risen, employers have implemented various strategies for controlling their own and their employees' costs including increased employee cost, sharing in premiums and copayments; benefits redesign, differential contributions for employees and their dependents, and new plan offerings. From 2002 to 2005, the University of Michigan implemented a series of changes in health benefit design that mirror may of the solutions proposed by large employers throughout the U.S. The overarching objective of the proposed research is to assess the factors that affect choice of health plans by the employees of a large employer. Our data incorporate a "natural experiment" in which the employer substantially changed the way health insurance plans are priced to employees and their dependents, changed the structure of coverage tiers for the pricing of dependent coverage, and, for the first time, offered preferred provider organizations (PPOs) as a health insurance option. Through analysis of the annual redesigned benefit offerings and employee responses observed through their plan and coverage tier choices, the specific aims of the proposed study are to: 1) Assess the role of premium cost and out-of-pocket price in decisions to change plans; 2) Assess the impact of coverage tier changes on decisions to change plans and/or tiers; 3) Assess the overall take-up of the newly offered PPO options and which types of plans lost enrollment to PPOs; 4) Determine which worker characteristics interact with price and plan design features to generate stronger or weaker than average responses. Four years of data from the University will be analyzed using log-linear, logit, and probit models to extend the principles of generalized linear models to better treat the case of dichotomous and polytomous dependent variables. With its incremental and controlled changes, large sample sizes, and mix of plans and tiers, this study will permit us to examine employee choices with regard to common, yet untested, solutions used by employers under conditions of increasing health care costs.