Employees' choice of health benefits and its effect on utilization and third-party payments.

摘要

Despite the popularity of Preferred-Provider Organizations (PPOs) in the employer-sponsored market, it is still unclear from the literature whether the adoption of the PPO cost-containment design is able to reduce employer coverage costs and efficiently manage employees' health services utilization relative to other plan designs. The objective of this research is to examine the effect of three PPO benefit designs on health services use and third-party payments compared to an Indemnity design, controlling for non-random selection. A by product of examining benefit design is observing predictors of health plan selection. All four plans in this study offered the exact same provider network and only differed in their out-of-pocket (OOP) cost-sharing requirements. To address the potential bias resulting from the endogenous health insurance choice, a two-stage residual inclusion equation is applied which allows for a consistent estimate of the effect of the PPOs. Of the four plans available, the PPO Standard was the most frequently selected plan (60%), followed by the PPO Plus (14%), PPO Basic (4%), and Indemnity (12%). Regression results showed the PPOs with the highest-cost sharing requirements, Standard (