Group Insurance Coverage, PPOs, and the Massachusetts Medicaid Buy-in Program Among Topics in INQUIRY

ROCHESTER, NY (02/26/2008)(readMedia)-- With both private and public health insurance undergoing considerable changes in recent years, case studies help researchers understand the impact of new trends. Three articles in the winter 2007/2008 issue of INQUIRY examine natural experiments that shed light on some of these changes and their effects on enrollees:

“Insurers’ Competitive Strategy and Enrollment in Newly Offered Preferred Provider Organizations (PPOs)” by Richard A. Hirth, Kyle L. Grazier, Michael E. Chernew, and Edward N. Okeke – This study looked at what happened when the University of Michigan (UM) offered its employees PPOs for the first time in 2005. Though total enrollment in UM’s two PPOs was less than 10%, they ranked fourth and fifth among the eight plans offered and appealed to workers who previously had been in less managed plans. There was little evidence of a backlash against managed care, since the PPOs drew few enrollees from health maintenance organizations (HMOs). The insurance vendors offering the PPOs were successful in maintaining and increasing their enrollment shares. The results appear consistent with national trends.

“Death Spiral or Euthanasia? The Demise of Generous Group Health Insurance Coverage” by Mark V. Pauly, Olivia S. Mitchell, and Yuhui Zeng – This paper evaluated the experience of a large East Coast educational institution as it moved from offering health benefits based on a fixed-dollar employer contribution to a partially risk-adjusted employer contribution. Results showed that implementing risk adjustment had no apparent effect on market share shrinkage of the most generous, low-deductible indemnity policy. This contrasts previous studies, which have argued that introducing risk-adjusted premiums is likely to cause major shifts in plan share, or even a “death spiral” due to adverse selection. The authors suggest that sometimes other factors---such as a change in enrollee preferences---may be behind the demise of a generous fee-for-service plan.

“Premium Increases in State Health Insurance Programs: Lessons from a Case Study of the Massachusetts Medicaid Buy-in Program” by Gina A. Livermore, Nanette Goodman, Fred Hooven, and Lobat Hashemi -- This study examined the enrollment experience of the Massachusetts CommonHealth-Working Program (CH-W), a state Medicaid buy-in program for people with disabilities, after it increased premiums in 2003. Findings indicate the premium change, which increased premium revenues by 39%, led to only a small loss in enrollment. This differs from other states that saw significant enrollment declines after premiums hikes. The authors argue that administrative procedures to minimize enrollee exits due to nonpayment of premiums are among the features that differentiate CH-W from other programs and may be the reason it didn't experience a big slide in enrollment.

Other winter research papers:

“The Accuracy of Reported Insurance Status in the MEPS” by Steven C. Hill – Using four sources of validation data---including surveys of employers and providers---this study found reports of private insurance and lack of insurance in the Medical Expenditure Panel Survey-Household Component to be reasonably accurate.

“Health-Based Risk Adjustment: Improving the Pharmacy-Based Cost Group Model by Adding Diagnostic Cost Groups,” by Femmeke J. Prinsze and René C.J.A. van Vliet – This paper describes the introduction of diagnostic cost groups to the risk adjustment system used in the Dutch social health insurance.

“Effects of Diagnosed Dementia on Medicare and Medicaid Program Costs” by Padmaja Ayyagari, Martin Salm, and Frank A. Sloan – Using an innovative method that estimated Medicare and Medicaid program payments over a person’s life cycle starting at age 65, this study found that Medicare and Medicaid costs attributed to diagnosed Alzheimer’s disease and related dementias (ADRD) decreased between 1994 and 1999. This is in contrast to an increase in costs implied by a cross-sectional approach. The authors attribute the cost decline to reduced Medicare and Medicaid spending for services other than nursing homes, particularly inpatient care and home health care.

Other features in the winter issue:

“The McNerney Forum: Ownership Form and Consumer Welfare: Evidence from the Nursing Home Industry” by Rexford E. Santerre and John A. Vernon – This analysis found that, from the consumer’s perspective, not-for-profit nursing homes are under-represented in most U.S. markets; thus, attracting more not-for-profit nursing homes to an area could boost quality of care. (open access article available at http://www.inquiryjournal.org/index.html)

“The View from Here: Ideology, Politics and Health Care Reform” -- INQUIRY Editor Alan Monheit calls for reasoned debate--not debate based solely on ideology--in political discussions on health care reform (open access article available at http://www.inquiryjournal.org/index.html)

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INQUIRY is a peer-reviewed scholarly publication. Now in its 44th year, it is published quarterly by Excellus Health Plan, Inc. Press releases and article abstracts are available at http://www.inquiryjournal.org/.

CONTACTS: Kevin Kane, APR, (585) 399-6635 kevin.kane@excellus.com or Ronny Frishman, frishman@rochester.rr.com, both for INQUIRY journal; SOURCE: INQUIRY journal http://www.inquiryjournal.org/