An Employer Analysis of Managed Care Costs and Satisfaction: Process, Effects, and Policy

ABSTRACT: Do managed care health plans truly control costs more effectively than nonmanaged care plans? Recent evidence suggests that employees are getting used to the managed care idea and that managed care is responsible for the sharp slowdown in health-care costs. This article examines recent changes in the delivery, financing, and consumption of health care from the perspective of a large multiple-site American corporation to see whether its health-care costs are controlled and whether this control occurs at the expense of employee satisfaction. A unique aspect of this study is that managed care was implemented more slowly and in phases at one of the six sites analyzed. The results suggest the following. First, the Study Corporation's health-care costs have not significantly increased four years following the change from an indemnity to a managed care plan. The authors interpret this result to mean that managed care has controlled costs because before the change, plan costs were increasing 15 percent per year. Second, the site with the underdeveloped network did not have higher costs than the other sites based on the analysis. Third, the authors show that employee satisfaction increased after implementation of the managed care plan. Moreover, satisfaction was higher at sites with more employees, higher usage, and higher health-care costs. Last, the results suggest that plan participant satisfaction increases as the managed care network becomes more developed. Policy and benefit manager recommendations are made on the basis of these reported findings.