Private Payers Serving Individuals with Disabilities and Chronic Conditions. D. Results

01/01/2000

1. Prevalence Estimates

Employers A and B had 403,700 and 204,724 health plan enrollees in 1995, respectively. The prevalence of potentially disabling chronic conditions varied considerably by employer.The 1995 prevalence rate for Employer A was estimated as 174 per 1,000 covered lives. The prevalence rate for Employer B was higher, 216 per 1,000 covered lives.

Potential Disability AmongService Users. The numerator for the prevalence numbers noted includes service users with potentially disabling chronic conditions. It does not include chronically ill people who used no services in 1995. The denominator includes all plan enrollees, regardless of whether any utilization occurred. The prevalence numbers noted above are based upon all employees and dependents, not just on users of medical care services. In a given year it is natural for many people not to use any health care services (Duanet al., 1983). Non-users pose few difficulties for health plan managers and clinicians. The more difficult group to manage includes those who do use services; this group includes about 75 percent of the enrollees in the health plans offered by Employers A and B.

Figure 5-1 limits the denominator to service users in 1995. This figure depicts differences in the percentages of 1995 service users who have potentially disabling chronic conditions, shown separately by plan type and user group (early retirees, active employees, other dependents, and children); all differences shown are statistically significant. We find that people with potentially disabling chronic conditions are more likely to have indemnity coverage than to be enrolled in a managed care plan, with one exception. The exception is that early retirees appear to favor Employer B's PPO plan over its indemnity and HMO plans. In all other cases, however, those with chronic, potentially disabling conditions appear to favor the indemnity plans. Among service users, the prevalence of potentially disabled chronically ill people is substantially higher for early retirees, as one might expect (i.e., many may retire early due to health problems). All of the differences in percentages between indemnity plans and other plans which are shown in the figures are statistically significant, which is not surprising given the large sample sizes overall used in the analysis.

Potentially Disabling Chronic Conditions. While Figure 5-1 considered the entire population of plan service users, Tables 5-1 through 5-4 look only at those with potentially disabling chronic conditions. The tables assess how the enrollee groups (active employees, retirees, dependents) differ in terms of their populations of enrollees with disabling conditions.

Tables 5-1 through 5-3 list the most frequent potentially disabling chronic disease diagnoses for adults (Table 5-1 and Table 5-2) and children (Table 5-3) for both employers. Table 5-4 shows the five most frequent potentially disabling chronic mental health diagnoses for Employer A. (Employer B's mental health data are available upon request.) In general, these tables show that the same types of conditions affect active employees, dependents, and early retirees, but there are some differences in rankings.

FIGURE 5-1: Percentages of 1995 Service Users Who Have Potentially Disabling Chronic Conditions by Plan Type, Employer, and Employee Group
Bar Chart, Employer A: Total -- POS % (18), Indemnity % (25); Early Retirees -- POS % (33), Indemnity % (45); Active Employees -- POS % (16), Indemnity % (23); Other Dependents -- POS % (22), Indemnity % (25); Children -- POS % (14), Indemnity % (15).
Bar Chart, Employer B: Total -- PPO % (27), HMO % (22), Indemnity % (32); Early Retirees -- PPO % (50), HMO % (41), Indemnity % (48); Active Employees -- PPO % (31), HMO % (24), Indemnity % (34); Other Dependents -- PPO % (28), HMO % (22), Indemnity % (30); Children -- PPO % (18), HMO % (17), Indemnity % (20).
NOTE: Values have been rounded to nearest percent. All differences are statistically significant (chi-square test of independence, p<.05).

Table 5-3, compared to Table 5-1 and Table 5-2, shows that the potentially disabling diseases among children are often different from the diseases observed for adults. For example, children are affected most often by asthma and other illnesses concerning nutrition, metabolism and development, congenital anomalies, and cerebral palsy; adults are more often affected by heart problems, arthritis, and cancer.

All of these tables show a high degree of overlap in the top ten lists of potentially disabling chronic conditions in the two employer populations. The differences in the mission of these two employers do not appear to result in major differences in the nature of their most frequently observed potentially disabling chronic conditions.

  TABLE 5-1. Ten Most Frequent Potentially Disabling Chronic Disease Diagnoses For People Age 18-64, Employer A, 1995  
  Active Employees Dependents Early Retirees
1 Chronic Ischemic Heart Disease Asthma Chronic Ischemic Heart Disease
2 Asthma Chronic Ischemic Heart Disease Cardiac Dysrhythmias
3 Cardiac Dysrhythmias Cardiac Dysrhythmias Chronic Obstructive Pulmonary Disease  
4 Complications of Heart Disease Breast Cancer Complications of Heart Disease
5 Angina Pectoris Endocarditis Angina Pectoris
6 Chronic Obstructive Pulmonary Disease   Chronic Obstructive Pulmonary Disease   Asthma
7 Endocarditis Complications of Heart Disease Heart Failure
8 Other Acute/Subacute Heart Disease Seizure Disorders Other Acute/Subacute Heart Disease
9 Heart Attack Rheumatoid Arthritis Endocarditis
10   Seizure Disorders Angina Pectoris Prostate Cancer


  TABLE 5-2. Ten Most Frequent Potentially Disabling Chronic Disease Diagnoses For People Age 18-64, Employer B, 1995  
  Active Employees Dependents Early Retirees
1 Asthma Asthma Chronic Ischemic Heart Disease
2 Chronic Ischemic Heart Disease Chronic Ischemic Heart Disease Cardiac Dysrhythmias
3 Cardiac Dysrhythmias Cardiac Dysrhythmias Chronic Obstructive Pulmonary Disease  
4 Chronic Obstructive Pulmonary Disease   Chronic Obstructive Pulmonary Disease   Asthma
5 Endocarditis Endocarditis Angina Pectoris
6 Complications of Heart Disease Breast Cancer Complications of Heart Disease
7 Angina Pectoris Seizure Disorders Heart Failure
8 Seizure Disorders Complications of Heart Disease Endocarditis
9 Breast Cancer Angina Pectoris Breast Cancer
10   Rheumatoid Arthritis Rheumatoid Arthritis Heart Attack


  TABLE 5-3. Ten Most Frequent Potentially Disabling Chronic Disease Diagnoses For Children Age 0-18, by Employer, 1995  
  Employer A Employer B
1 Asthma Asthma
2 Symptoms Concerning Nutrition, Metabolism, Development Symptoms Concerning Nutrition, Metabolism, Development
3 Congenital Anomalies of Limbs Congenital Anomalies of Limbs
4 Heart Anomalies (Bulbous Cardia, Cardiac Septal Closure)   Hypercholesterolemia
5 Nervous and Musculoskeletal Symptoms Other Conditions of Brain
6 Hypercholesterolemia Heart Anomalies (Bulbous Cardia, Cardiac Septal Closure)  
7 Congenital Musculoskeletal Anomalies Nervous and Musculoskeletal Symptoms
8 Cerebral Palsy Congenital Musculoskeletal Anomalies
9 Congenital Heart Anomalies Congenital Heart Anomalies
10   Other Conditions of Brain Cerebral Palsy


  TABLE 5-4. Five Most Frequent Potentially Disabling Chronic Mental health Diagnoses For Adults Age 18-64, Employer A, 1995  
  Active Employees Dependents Early Retirees
1 Neurotic Disorders Neurotic Disorders Neurotic Disorders
2 Affective Psychoses/ Depressive Disorders   Affective Psychoses/ Depressive Disorders   Affective Psychoses/ Depressive Disorders  
3 Other Nonorganic Psychoses Other Nonorganic Psychoses Other Nonorganic Psychoses
4 Adjustment Reaction Adjustment Reaction Schizophrenic Disorders
5   Disturbance of Conduct Schizophrenic Disorders Other Organic Psychotic Conditions

2. Demographic Characteristics

We found some differences in the age and case mix and almost no differences in gender distributions of patients with potentially disabling chronic conditions between people in indemnity plans and those who switched plans. Most of the significant differences in average age reflect comparisons between the indemnity and managed care plans of both employers. Some small differences are statistically significant due to the large sample sizes used in the analysis.

There are large and small differences in average age by plan type, as seen in Table 5-5.3 Average ages for children and early retirees were slightly lower in managed care plans compared to the same groups in indemnity plans. Among the adult groups there were substantial differences in average age across plan types. Adults enrolled in managed care plans (either the POS plans offered by Employer A or the HMOs offered by Employer B) tended to be about five years younger on average than their counterparts in indemnity plans, and the differences were statistically significant.

Table 5-6 shows that there are few differences in the gender distribution according to plan type. The only notable difference appears for early retirees covered by Employer B. Among this group there are, in percentage terms, significantly fewer women in the indemnity plan, compared to those in the HMO.

TABLE 5-5. Mean Age By Employer, Sample, and Plan Type, 1995
Plan Type Total Adults   Children     Early Retirees  
Employer A
   Indemnity 47.84 50.76 10.04 60.28
   POS Plan   41.37*     46.59*   9.57* 59.04*
   Switched Plan Type   49.38 48.18 9.65 59.80
Employer B
   Indemnity 44.37 48.32 9.61 58.79
   HMO 35.56* 42.60* 8.80* 58.70
   Switched Plan Type 37.25 43.07 8.95 56.25*
* Mean is significantly different from indemnity plan mean (p<0.05, analysis of variance)


  TABLE 5-6. Percent Female By Employer, Sample and Plan Type, 1995  
Plan Type   Total     Adults     Children     Early Retirees  
Employer A
   Indemnity 50.84 55.84 41.05 27.99
   POS Plan 48.42 52.68* 40.46 27.14
   Switched Plan Type   43.17 54.19 39.84 29.22
Employer B
   Indemnity 44.07 56.08 43.81 37.29
   HMO 53.90 57.82* 41.91 42.58*
   Switched Plan Type 56.89 60.37* 43.30 49.32
* Mean is significantly different from indemnity plan mean (p<0.05, analysis of variance)

Plan Switchers. We also distinguish between those who stayed in the plan for the entire study period and those who switched between plans. Individuals have incentives to switch plans in order to obtain better, more convenient, or less costly care. The impetus to switch may be the onset of an illness like the chronic disabling conditions under consideration. Alternatively, it may take time to learn about the benefits and costs of all plans. The POS plan offered by Employer A was relatively new at the time of this study, and some individuals who switched to it in 1995 might have done so earlier had they known about it sooner.

People who switch plans are likely to be different from those who do not switch. Consider two plans, one with high benefits and a high premium and one with low benefits and a low premium. Individuals know their own health states and so can choose between plans based on expected costs. It would be natural for healthy individuals to enroll in the low-cost, low-benefit plan since they expect not to need much care. Individuals with chronic illnesses would be more likely to enroll in the high-cost, high-benefit plan, however, figuring that their gain from the greater benefits (say, more coverage and lower out-of-pocket expenses) would outweigh the higher premium. People in the low-cost plan who develop chronic illnesses may switch to the high-cost plan, for example, while relatively healthy individuals will be more likely to move away from the high-cost plan into the low-cost plan.

For Employer A the low-cost plan is the POS, so we expect that individuals switching into the POS from the high-cost indemnity plan will be healthier than those who stay in the indemnity plan. The data, shown in Appendix C-1, reveal that individuals switching into the POS plan are indeed less likely to have physical or mental disabilities than those who stay in the indemnity plan. We find a similar result for Employer B: those who switch from the high-cost indemnity plan to the low-cost HMO are less likely to have physical disabilities, although they are just as likely to have mental disabilities.4

3. Case Mix Differences by Plan Type

Now we present a summary of the case mix analysis. More detailed results are provided in Appendix B.

Figure 5-2 depicts differences in the average number of major diagnostic categories (MDCs) represented by the chronic conditions of people in the analytic sample. For Employer A differences were small for adults. However, there were slightly larger differences by plan type in average MDC counts for children and for early retirees. Children and early retirees covered by the POS plan had more MDCs on average than those in the indemnity plan. For Employer B, the average number of MDCs tended to be smaller for those adults in the HMO plan than in the indemnity plan. The average number was slightly higher for children in the HMO than in the indemnity plan.

Figure 5-3 shows differences in the average number of psychiatric diagnostic groups for people with mental health problems, by plan type. For Employer A, the averages were similar for those in the indemnity and POS plans. The larger difference was between those who switched plan type sometime in the 1994-95 period and those who were always in the indemnity plan during that period. Switchers tended to have lower average numbers of psychiatric diagnostic groups, though the only significant difference was among early retirees.

Data for Employer B show a different pattern. The average number of psychiatric diagnostic groups is higher for those who switched plans during the 1994-95 period than for those who were always in the indemnity plan. This difference was statistically significant only among adults, however. Among those covered by Employer B (data not shown), roughly 2.5 times as many people moved from an HMO to indemnity coverage as moved from indemnity coverage to an HMO plan. The data presented here cannot tell us whether plan switching is due to the existence of any particular mental health problem, however.

  FIGURE 5-2: Mean Number of Unique Major Diagnostic Categories (MDCs), by Employer, Plan Type and Age Group, 1995  
Bar Chart, Employer A: Adults -- Indemnity (4.12), POS (4.20), Switched (3.84); Children -- Indemnity (3.28), POS (3.74*), Switched (3.37); Early Retirees -- Indemnity (4.32), POS (4.47*), Switched (3.87*).
Bar Chart, Employer B: Adults -- Indemnity (4.37), HMO (3.94*), Switched (4.65); Children -- Indemnity (3.60), HMO (3.75*), Switched (4.03*); Early Retirees -- Indemnity (4.83), HMO (4.58), Switched (4.82).
* Mean is significantly different from indemnity plan mean (p < 0.05, analysis of variance)


  FIGURE 5-3: Mean Number of Unique Psychiatric Diagnostic Groups, by Employer, Plan Type and Age Group, 1995  
Bar Chart, Employer A: Adults -- Indemnity (0.29*), POS (0.32*), Switched (0.24); Children -- Indemnity (0.41), POS (0.42), Switched (0.36); Early Retirees -- Indemnity (0.19), POS (0.20), Switched (0.12*).
Bar Chart, Employer B: Adults -- Indemnity (0.34), HMO (0.38*), Switched (0.46*); Children -- Indemnity (0.31), HMO (0.30), Switched (0.36); Early Retirees -- Indemnity (0.26), HMO (0.27), Switched (0.27).
* Mean is significantly different from indemnity plan mean (p < 0.05, analysis of variance)


  FIGURE 5-4: Percent of People with Activity-Limiting Conditions by Employer, Plan Type and Age Group, 1995  
Bar Chart, Employer A: Adults -- Indemnity (46.16), POS (57.83*), Switched (35.71*); Children -- Indemnity (38.43), POS (51.43*), Switched (29.13*); Early Retirees -- Indemnity (46.16), POS (57.83*), Switched (35.71*).
Bar Chart, Employer B: Adults -- Indemnity (46.80), HMO (34.59*), Switched (34.56*); Children -- Indemnity (44.47), HMO (41.29*), Switched (39.23); Early Retirees -- Indemnity (46.80), HMO (34.59*), Switched (34.56*).
* Mean is significantly different from indemnity plan mean (p < 0.05, analysis of variance)

Now we present an alternative measure of disability--the presence in the study data of conditions which individuals indicate in national surveys as causing limitations in their life activities (LaPlante, 1989). Figure 5-4 shows the percentages of people who had these activity-limiting conditions. The patterns differ substantially by employer. Among those covered by Employer A's health plans, significantly higher percentages of those with the activity-limiting conditions can be found in the POS plan, compared to the indemnity plan. In contrast, among those covered by Employer B, significantly higher percentages of those with the activity-limiting conditions can be found in the indemnity plan. The observed patterns for both Employers do not differ according to whether the focus is on children, adults, or early retirees.

4. Service Use and Expenditure Differences by Employer and Plan Type

Inpatient Service Use

Hospitalization rates in 1995 for those with potentially disabling chronic conditions were higher for Employer A than for Employer B in all plan types (see Figure 5-5). Among those covered by Employer A, few differences in hospitalization rates are noted for those in the indemnity and POS plans. Those who switched plan type sometime during the 1994-95 period were substantially less likely to be hospitalized relative to people who stayed in either indemnity or managed care plans for the whole period. The differences between switchers and those in the indemnity plan were statistically significant in the analyses pertaining to adults and early retirees. Switchers who were covered by Employer B also tended to have lower hospitalization rates compared to those in the indemnity plan, but the difference was statistically significant only for adults.

  FIGURE 5-5: Percent Hospitalized During Year, by Employer, Plan Type and Age Group, 1995  
Bar Chart, Employer A: Adults -- Indemnity (16.73), POS (17.72*), Switched (12.19*); Children -- Indemnity (10.64), POS (11.58), Switched (7.56); Early Retirees -- Indemnity (20.80), POS (22.36), Switched (15.69*).
Bar Chart, Employer B: Adults -- Indemnity (13.09), HMO (11.96*), Switched (10.20*); Children -- Indemnity (9.24), HMO (7.28), Switched (5.74); Early Retirees -- Indemnity (18.33), HMO (18.13), Switched (8.22).
* Mean is significantly different from indemnity plan mean (p < 0.05, analysis of variance)

The rate of readmission to the hospital within 30 days of a previous hospital discharge is considered a rough indicator of the quality of hospital care when patient characteristics are comparable across plans and facilities. All else equal, one would expect no differences by plan type in readmission rates, if quality were constant across plans. Although not adjusted here for plan population differences, in Figure 5-6 we present the simple differences as a baseline measure. Readmission rates between indemnity and POS plans were very similar for all three samples (adults, children, and early retirees) for Employer A. However, among adults covered by Employer B's plans, those in the HMO plan had significantly lower readmission rates than those in the indemnity plan.

  FIGURE 5-6: Percent of People Readmitted within 30 Days of Hospital Discharge, by Employer, Plan Type and Age Group, 1995  
Bar Chart, Employer A: Adults -- Indemnity (2.03), POS (2.00), Switched (1.21*); Children -- Indemnity (1.20), POS (1.07), Switched (0.63); Early Retirees -- Indemnity (2.98), POS (2.83), Switched (0.98*).
Bar Chart, Employer B: Adults -- Indemnity (1.79), HMO (1.10*), Switched (1.62); Children -- Indemnity (0.42), HMO (0.69), Switched (0.24); Early Retirees -- Indemnity (3.25), HMO (3.41), Switched (1.37).
* Mean is significantly different from indemnity plan mean (p < 0.05, analysis of variance)

Outpatient Service Use

Figure 5-7 shows the number of outpatient claim days for each group, an indicator of the number of outpatient visits made on separate days. For Employer A, estimated visits were significantly higher for those in the POS plan compared to those in the indemnity plan. These differences were statistically significant in all three samples (adults, children, and early retirees). For Employer B the opposite occurred; the average number of outpatient claims days was higher among indemnity plan members than among HMO members.

Home health care use (Figure 5-8) was substantially higher under managed care (POS or HMO) plans than indemnity plans for both employers. As with home health care, the use of therapy services (physical, occupational, or speech) was significantly higher in Employer A's POS plan than in the indemnity plan (Figure 5-9). A different pattern emerged for Employer B, however, where therapy use rates tended to be lower in the managed care plan.

  FIGURE 5-7: Mean Number of Outpatient Claim-Days during Year, by Employer, Plan Type and Age Group, 1995  
Bar Chart, Employer A: Adults -- Indemnity (13.87), POS (15.63*), Switched (12.68*); Children -- Indemnity (11.14), POS (11.84*), Switched (10.02); Early Retirees -- Indemnity (14.81), POS (18.18*), Switched (13.19).
Bar Chart, Employer B: Adults -- Indemnity (14.83), HMO (11.77*), Switched (14.76); Children -- Indemnity (10.94), HMO (10.07*), Switched (11.2); Early Retirees -- Indemnity (17.11), HMO (15.47), Switched (15.88).
* Mean is significantly different from indemnity plan mean (p < 0.05, analysis of variance)


  FIGURE 5-8: Percent Using Home Health Care, by Employer, Plan Type and Age Group, 19951  
Bar Chart, Employer A: Adults -- Indemnity (8.66), POS (8.38*), Switched (5.38*); Children -- Indemnity (6.37), POS (8.08*), Switched (4.72); Early Retirees -- Indemnity (10.8), POS (11.86*), Switched (8.24*).
Bar Chart, Employer B: Adults -- Indemnity (4.27), HMO (7.69*), Switched (5.57); Children -- Indemnity (4.31), HMO (10.33*), Switched (6.46); Early Retirees -- Indemnity (5.96), HMO (11.83*), Switched (12.23*).
* Mean is significantly different from indemnity plan mean (p < 0.05, analysis of variance)


  FIGURE 5-9: Percent Any Therapies, by Employer, Plan Type and Age Group, 19951  
Bar Chart, Employer A: Adults -- Indemnity (6.52), POS (21.65*), Switched (7.22); Children -- Indemnity (8.25), POS (11.63*), Switched (5.83); Early Retirees -- Indemnity (4.95), POS (12.95*), Switched (7.25).
Bar Chart, Employer B: Adults -- Indemnity (18.48), HMO (17.26*), Switched (18.56); Children -- Indemnity (10.68), HMO (7.53*), Switched (5.98*); Early Retirees -- Indemnity (15.42), HMO (12.41), Switched (12.33).
* Mean is significantly different from indemnity plan mean (p < 0.05, analysis of variance)
  1. Includes physician, occupational, or speech therapy.

Average Expenditures by Employer and Plan Type

Among those who used any inpatient services in 1995, there was no significant difference in inpatient expenditures across plan types for Employer A (not shown). For Employer B, however, mean inpatient expenditures were significantly lower for adults in the HMO plan ($11,095) than for those in the indemnity plan ($19,908).

A similar pattern emerges for outpatient care (not shown). Average outpatient expenditures were similar across plan type for Employer A, with one exception. Among children, the average outpatient expenditures were significantly higher for those in the POS plan ($1,759) than for those in the indemnity plan ($1,487). For Employer B, average outpatient expenditures were significantly lower for HMO members, for all three samples (adults, children, and early retirees).

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