Center for Studying Health System Change

1999 Data Shows 64% of Families Offered Coverage Have a Choice of Health Plans

News Releases
February 22, 2000

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ASHINGTON, D.C. -- Sixty-four percent of American families offered coverage have a choice of health plans - a modest two percentage point gain between 1997 and 1999 - according to a new trend study (see HSC Issue Brief #27 "Who Has a Choice of Health Plans") from the Center for Studying Health System Change (HSC). The amount of choice is larger than commonly assumed, in part because the study includes plan options available to the whole family when spouses are each offered coverage by their employer. Most other studies only consider the choice of plans offered to individuals in their own workplace.

The study - that analyzes 1997 and 1999 HSC Household Survey data - shows that plan options have increased for workers in larger firms (more than 50 employees) and for those living in small metropolitan areas. Comparable gains were not found for those working in small firms or those living in larger metropolitan areas. In fact, only 25 percent of those working in firms of less than 50 persons have a choice of health plans, unchanged from 1997.

"Small firms continue to have a particularly difficult time offering choice of plans due in part to higher administrative costs," said Paul B. Ginsburg, president of HSC. "But this issue of choice extends more broadly. Choice of plan is at the heart of whether or not consumers can shape the health system to meet their needs."

The HSC study also reports that 73 percent of government employees have a choice of plans, as compared to 70 percent two years ago, and that their strong presence in a market may account for greater choice in a community. In addition to type of industry, the presence of unions or a strong demand for hard-to-recruit, highly skilled workers are also factors that may increase choice in a given market.

"These results are encouraging in that far more people have a choice of plan than we had believed," said Bill Gradison, Senior Public Policy Counselor, Patton Boggs, LLP. "Mechanisms to foster greater choice may need to be pursued, but the marketplace seems to be moving in the right direction."

The HSC study also considers the breadth of choice available to families. Specifically, 49 percent of families who are offered employer-sponsored coverage can choose between an HMO and a plan with fewer restrictions. The breadth of choice available has increased in both small and mid-size communities.

"Choice of plans is but one mechanism to make plans more responsive to consumers and breadth of that choice is important," said Ron Pollack, Executive Director, FamilesUSA, "But choice is not sufficient. Patient protections requiring that all consumers have access to a well functioning grievance/appeals system and last resort legal remedies are also necessary to ensure that plans respond to the needs of consumers."

"The growth in choice of health plans over the last two years was modest, so it is unlikely that choice will increase that much without some kind of policy intervention," said study author and senior HSC researcher, Sally Trude, Ph.D. "The possible policy responses include a range of remedies directed at the market, while other options would ensure patient protections as a proxy for choice."

This study presents findings from the HSC Household Survey conducted in 1996-1997 and in 1998-1999. The Household Survey is a nationally representative telephone survey of nearly 33,000 families and 60,000 individuals conducted every two years.

The Center for Studying Health System Change -- an independent research organization funded exclusively by The Robert Wood Johnson Foundation -- provides objective, timely analyses about changes in the nation’s health care system and their impact on consumers to private and public decision makers. HSC, based in Washington, D.C., is affiliated with Mathematica Policy Research, Inc.