Private Payers Serving Individuals with Disabilities and Chronic Conditions. E. Multivariate Analytical Files: Description and Comparison across Insurance Types


1. Employer A

For Employer A, the analytic file for this analysis was restricted to those employees that had an insurance claim in 1995 with a per se disabling condition. Of these employees, 25,044 had complete enrollment data for the year. Those individuals who switched from one plan type to anotherduring 1995 or who had inconsistent or missing data were deleted from the file. After these exclusions 23,270 employees remained,11,061 POS enrollees and 12,209 indemnity plan enrollees. Note that the analysis of prescription drug use and expenditures was only done for a subset of this file since Employer A's drug data was underreported in 1995. This subset contained the 17,232 patients with at least one valid prescription claim.

For these two samples, characteristics of POS enrollees were compared to those of indemnity plan enrollees. These descriptive statistics are presented in Appendix C, Table C-5. Because claims data for individuals enrolled in the POS option was underreported in 1994, a comparison of past utilization levels and expenditures between plan types was precluded.

The POS plan had a slightly higher percentage of male enrollees than the indemnity plan in 1995. Enrollees in the POS plan were also more likely to live in a metropolitan statistical area (91.9 percent versus 80.8 percent). The distribution of individuals across the job categories (active full-time, early retirees, other) differs between those in the POS plan and those in the indemnity plan. Although the majority of members in each of the plans were active full-time employees, a greater percentage of those in the POS plan (75.4 percent) were in this category as opposed to the indemnity plan (58 percent). The indemnity plan had a greater percentage of early retirees and employees that were classified in the "other" category.

The two subsamples appear to be quite similar in terms of the types of potentially disabling chronic conditions they had in 1995. Although there was a statistically significant difference between the plan types in the percentage of people in each per se disability group, the magnitude of the differences is small. Most plan members, regardless of plan type, had a physical per se condition only (91.4 percent for the POS plan and 92.2 for the indemnity option) rather than a mental per secondition or both types of conditions. A somewhat larger difference was found in the percentages of members that had an activity-limiting condition in 1995: 64.9 percent of POS enrollees and 69.5 percent of indemnity enrollees.

Small differences were also found between these two groups in terms of health care use in 1995. POS enrollees were more likely to use rehabilitation services than were those in the indemnity plan (9.7 percent and 6.6 percent, respectively). They also had more outpatient visits (16.4 versus 15.2). The mean number of hospital admissions was lower for POS enrollees (0.261) than for indemnity enrollees (0.301), as was the mean length of stay (1.5 versus 1.8 days). That POS enrollees had more outpatient visits and shorter lengths of inpatient stays is consistent with the widely held view that managed care emphasizes outpatient over inpatient care.

Larger differences in 1995 yearly payments were found between the two groups than were found for the utilization measures. Indemnity plan enrollees had significantly higher inpatient, outpatient and total expenditures than POS enrollees. A comparison across the groups in terms of prescription drug use and payments also yielded differences. POS enrollees who used the drug benefit had significantly fewer prescriptions filled (15.1 versus 20.1) and lower drug expenditures ($758 versus $911) than did indemnity enrollees who used the drug benefit. Total payments (including drug expenditures) were also lower for these POS enrollees than for indemnity enrollees ($6,870 and $9,138, respectively).

These descriptive findings on payments are consistent with two very different hypotheses: (1) the POS plan constrained costs compared to indemnity coverage or (2) enrollees of the POS plan were inherently healthier than their indemnity plan counterparts. The multivariate analysis presented in the next section attempts to disentangle these two determinants of expenditures by simultaneously controlling for differences in individual patient characteristics and plan choice.

2. Employer B

The analytic file for Employer B for the multivariate analysis included insurance claims for health care services used in 1994 and 1995 by employees, spouses and dependents with at least one chronic disabling condition. Only those patients who had continuous enrollment for both years were retained, thereby eliminating those who might have lost insurance coverage over the period. Those who switched from one plan type to another during 1995 were also excluded. After eliminating records with inconsistent or missing data on key analytical variables, the final sample contained information on 22,801 individuals: 9,686 in HMOs and 13,115 in the indemnity plan in 1995.

Characteristics of HMO enrollees were compared to those of indemnity plan enrollees. Statistics for these comparisons are presented in Appendix C, Table C-6. In 1995, HMO enrollees were 8 years younger on average than were enrollees in the indemnity plan. More than 98 percent of all individuals lived in an MSA. Roughly half of enrollees with a per se disabling condition in both groups were employees rather than dependents or spouses. A greater percentage of people in HMOs were classified as dependents (25.2 percent) than in the indemnity group (15.1 percent), while many more indemnity enrollees than HMO enrollees were in the early retiree category (18.6 percent versus 6.7 percent).

The distribution of the three disability categories was also significantly different across the two groups, although the percentages were similar. As was found in Employer A's data, most members with any disability have a physical disability alone (83 percent of HMO members and 85 percent for indemnity members). HMO members were less likely than indemnity plan members to have an activity limiting condition in 1995 (58.3 percent and 62.4 percent, respectively) and have this type of condition in both 1994 and 1995 (27.1 percent and 33.7 percent, respectively). In addition, the percent of patients having a per se potentially disabling condition in both years was much lower for HMO members than for indemnity enrollees (52.0 percent versus 60.3 percent). As for Employer A, less healthy individuals may have opted for the more generous indemnity insurance instead of HMO coverage.

Health care use and expenditure measures followed the expected pattern, with greater use and higher expenditures among indemnity enrollees. All of the health care use measures, except for rehabilitation use in 1995, were found to be statistically different between the two groups of patients. In both 1994 and 1995, HMO enrollees had fewer outpatient visits than did indemnity enrollees. The mean number of hospital admissions and mean length of stay was also higher for indemnity enrollees in both years, although the differences were quite small. Mean outpatient payments were lower by $1,700 in 1994 and $1,600 in 1995 for HMO enrollees. Mean inpatient payments and mean total payments were also much lower for HMO members than for indemnity enrollees. Note that the differences in expenditures were relatively large, especially in light of the small differences in utilization. As such, it is unlikely that the lower expenditures in the HMO were simply the result of lower utilization levels in this type of plan.

These results mirror the findings for Employer A in terms of cost and inpatient use. Managed care enrollees appear to use fewer inpatient services and have lower costs than their indemnity plan counterparts. However, in terms of outpatient service use the results for the two Employers differ. For Employer A, patients in the managed care option had higher levels of use on average, whereas for Employer B average outpatient use was actually lower than that found in the indemnity plan. In addition, no difference in the likelihood of rehabilitation use was found for Employer B across the insurance options, but for Employer A, those in managed care were more likely to use these types of services.

In sum, these results suggest that both Employers may be subject to not only a managed care effect on utilization and expenditures but also differential selection of insurance by patients. Simple descriptive statistics such as these cannot separate the impact of these two influences on utilization and expenditures, however, since other factors may be influencing these trends. For example, the finding that indemnity plan members in both Employers have higher payments is consistent with both an insurance effect and adverse selection. More generous insurance not only reduces the cost of care from the patient's perspective, but also attracts relatively sicker patients. The remainder of the chapter presents results from the multivariate framework described in Section VI.C.3 in an attempt to separate these factors. The next section presents the results from this exercise.

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