Health plan diagnostics: what plan sponsors and trustees need to know

The needed information for diagnosing the cost-effectiveness of the health plan includes understanding where cost pressures are coming from, how the plan compares to other plans and the key characteristics of the covered group. Allocating resources for the staff or consultants to produce and analyze this information is a wise investment. Two case studies illustrate the power of plan diagnostics to lead to positive solutions that address cost increases--without hurting plan members.     

Multiple HMO/indemnity plan supplement design: a managed care strategy for employers with high HMO enrollment

This article outlines a health care benefits strategy that combines features of the multiple HMO choice approach and the point-of-service approach. Although this plan design may not be appropriate for all employers, it may provide the greatest long-term cost savings for employers with high HMO enrollment, according to the author.     

Managed care and the near-elderly: effects of plan enrollment on functionality

This paper examines the effects of enrollment in a health maintenance organization (HMO) or a preferred provider organization (PPO) on the functional status of near-elderly adults (aged 55–64), compared to traditional fee-for-service (FFS) plans. A sample of 1306 near-elderly adults with employer-sponsored health insurance are drawn from the 2000–2002 waves of the Health and Retirement Study, a nationally representative panel survey of community-dwelling adults. Regression models are estimated to assess the effects of different types of insurance plans on functionality, as measured by whether or not the individual has any functional limitations. The potential influence of selection bias into alternative types of plans is addressed by limiting the sample to near-elders without a choice of health plans. The effects of HMOs on functionality are shown to be comparable to those of FFS plans among the general near-elderly population. However, significant adverse effects of HMO enrollment on functional status are observed among near-elders with chronic conditions. PPO enrollees have similar functional outcome to FFS enrollees, even among those with chronic conditions. The observed differences in functional outcome across plans have important implications for the practicality of managed care plans serving older adults.     

Designing your health benefit plan

A health care benefit plan should meet the needs and expectations of your organization and its insureds. Each organization is unique, so a health care benefit plan shouldn't be "off the shelf" but be uniquely tailored for your organization. Analyze current demographic, utilization and other data to determine which services members and their families are using and what type of services may be needed in the future.     

Investigating household choice for health and life insurance

The objective of this article is to investigate the joint determination of household choice for health and life insurance. Using the 2008–2009 Consumer Expenditure Survey data, we model household choice for health and life insurance assuming households consider purchasing them to manage financial risks in their life, after accounting for household characteristics, insurance characteristics, health status, and disability status. The model allows assessing the impact of health insurance choice on the choice of life insurance and the correlation between these two choices. The result suggests that health insurance choice positively affects the choice of life insurance and these two choices are positively correlated indicating complementary nature of these insurances in the basket of households’ risk minimising goods.     

Managed health care: great cost savings with minimal legal risks

Managed care offers great promise for health care cost savings, but it is not without risk. This author suggests how that risk can be minimized.     

The welfare economics of a health plan merger

Recently, two large health maintenance organizations (HMOs) in Minneapolis merged to form a single company with over half of the total Twin Cities HMO enrollment. This paper strongly suggests that the merger will have adverse consequences for consumers. I use a model of health plan rivalry and empirical demand functions to predict that health insurance premiums in 6 Twin Cities firms will rise by as much as 19 percent after the merger. Next, I show how to calculate the loss in consumer surplus in a discrete choice model and predict that the merger will reduce surplus by 4.4% on average. Several objections to these conclusions are considered but, on the whole, the analysis raises serious concerns for public policy toward HMO mergers.     

Understanding multiemployer health and welfare plan financial statements

The trustees of a health and welfare plan may choose to delegate monitoring of the plan's financial operations. Still, it is important that they have a basic understanding of welfare plan financial statements.     

A Case for Managed Exchange Rates*

The incorporation of adaptive expectations by Dornbusch in a Mundell-Fleming model modifies significantly the traditional results of policy effectiveness in a small, open economy. While monetary policy is still able to influence aggregate demand when flexible exchange rates prevail, the effects of this policy on other important variables in the economy during the adjustment process to a new equilibrium may be considered sufficiently ‘disruptive’ so that the authorities will be hesitant to use their only fully-effective policy instrument for income-stabilization purposes. However, by adding a target level for the exchange rate to their list of goal variables and by using an appropriate mix of monetary and fiscal policies, it appears to be possible for the government to avoid these disruptive side effects.