NCPA - National Center for Policy Analysis

Neither Quality Nor Cost Drive Health Plan Choices

May 25, 2000

One out of six of privately insured persons (17 percent) changes his health care plan each year. A new study finds that about 70 percent do so because of a change in jobs or in health plans offered by their employers. Less than a fourth do so because of quality or cost issues. Of those who change their health insurance:

  • A little under a third do so because of a job change.
  • At least one third do so because their employer changed plan offerings.
  • Only 7.9 percent switch plans because they are seeking higher quality.
  • And 15.9 percent switch because their new plan is cheaper.

The study also found Health Maintenance Organizations (HMOs) are not being forced onto employees, but are being actively sought by individuals who choose to sacrifice some quality care for cheaper cost.

  • Of the 7.9 percent that change health care plans seeking an improvement in quality, 62.8 percent changed from a non-HMO to an HMO or stayed with a HMO.
  • Of the 15.9 percent that change health care plans because of cost, 60.3 percent changed from a non-HMO to an HMO or stayed with a HMO.

While the study concedes it is difficult to completely discern between voluntary and involuntary plan switching, it concludes HMOs are more popular among those seeking lower cost for lower quality care.

Source: Peter J. Cunningham and Linda Kohn (Center for Studying Health System Change), "Health Plan Switching: Choice or Circumstance?" Health Affairs, May-June 2000.


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