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Americans Reassess Health Care Choice-Cost Trade-offs
More Willing to Limit Choice of Physicians and Hospitals in Return for Lower Out-of-Pocket Costs
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Between 2001 and 2003, the proportion of working-age Americans with employer health coverage willing to trade broad choice of providers for lower out-of-pocket costs increased from 55 percent to 59 percentafter the rate had been stable since 1997, the study found.
"A likely explanation for the change in consumer attitudes is that the growing burden of out-of-pocket medical costs is prompting a reassessment of the choice-cost trade-off," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization funded principally by The Robert Wood Johnson Foundation.
Consumer demand for broader choice of health care providers was a driving force behind the managed care backlash of the mid-1990s. Under pressure from employers and consumers, health plans broadened provider networks and eased other care restrictions, but these changes were accompanied by rapidly rising health insurance premiums. In response, many employers in 2002 began increasing patient cost sharing through higher deductibles, copayments and coinsurance, where patients pay a percentage of the bill rather than a fixed-dollar amount.
The studys findings are based on HSCs Community Tracking Study Household Survey, a nationally representative survey that asked people whether they were strongly unwilling, somewhat unwilling, somewhat willing or strongly willing to accept a limited choice of physicians and hospitals to save money on out-of-pocket costs for health care. The definition of out-of-pocket costs excludes individuals contributions toward health insurance premiums. In 2003, the survey included 20,500 adults aged 18-64 with employer-sponsored insurance, while the 2001 survey included 28,000 working-age adults with employer coverage.
"Americans are deeply divided over the trade-off between unfettered choice of physicians and hospitals and lowering their out-of-pocket health costs," said Ha T. Tu, M.P.A., an HSC health researcher and study author. "Substantial minorities feel intensely about this hot-button issue: 20 percent were strongly willing to limit provider choice, while 21 percent were strongly unwilling."
The studys findings are detailed in a new HSC Issue BriefMore Americans Willing to Limit Physician-Hospital Choice for Lower Medical Costsavailable here. Other key findings include:
Given the diversity of choice-cost opinions, offering a variety of insurance products representing different choice-cost options would satisfy the largest number of consumers, according to the study. Yet, in recent years, many employers have reduced the range of insurance options offered to their workers. At the same time, many employers have chosen to adopt broader provider networks and increase patient cost sharing, leaving those who are willing to trade choice for lower costs with fewer opportunities to do so.
Whether employers provide such options in the future likely will depend on whether they perceive enough demand for those products from their highly paid workersoften the portion of their workforce for which recruitment and retention concerns are greatest.
"If employers dont see the need to provide lower-cost options to satisfy
high-earning workers, then it is unlikely that these options will be offered
broadly," Tu said. "Increasingly, consumersespecially low-income
peoplewilling to limit provider choice for lower costs may find no way of satisfying
those preferences, resulting in lower take-up of employer-sponsored insurance
and an increase in uninsured Americans."
The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nations changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.