Quality and Employers' Choice of Health Plan

Michael Chernew, Gautam Gowrisankaran, Catherine McLaughlin, Teresa Gibson

NBER Working Paper No. 9847
Issued in July 2003
NBER Program(s):Health Economics

We seek to understand the relationship between employer decisions regarding which health plans firms choose to offer to their employees and the performance of those plans. We measure performance using data from the Health Plan Employer Data Information Set (HEDIS) and the Consumer Assessment of Health Plan Survey (CAHPS). We use a unique data set that lists the Health Maintenance Organizations (HMOs) available to, and offered by, large employers across markets in the year 2000, and examine the relationship between plan offerings, performance measures and other plan characteristics. We estimate two sets of specifications that differ in whether they model plan choice as a function of absolute plan performance or plan performance relative to competitors. We find that employers are more likely to offer plans with strong absolute and relative HEDIS and CAHPS performance measures. Our results are consistent with the view that large employers are responsive to the interests of their employees.

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Document Object Identifier (DOI): 10.3386/w9847

Published: Chernew, Michael, Gautam Gowrisankaran, Catherine McLaughlin and Teresa Gibson. “Quality and Employers' Choice of Health Plan." Journal of Health Economics 23 (2004): 471–92.

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