A Guide to Facilitating Consumer Choice

Abstract

PROLOGUE:Health plan purchasers play a pivotal role in ensuring that health plans deliver high-quality, cost-effective care to consumers. As the source of potential enrollees for health plans, they are ideally situated to bargain for the best benefits at the lowest cost, and thus to set a standard for health plan quality and efficiency. But how do they go about selecting plans for their enrollees, and how do they know what benefits to require? If purchasers enlist consumers in the selection process by offering them a range of plans to choose from, what information should they provide to guide consumer decision making? This paper by Elizabeth Hoy, Elliot Wicks, and Rolfe Forland examines how purchasers can structure consumer choice to promote competition based on quality and cost-effectiveness. The authors compare six purchasing organizations that use a consumer-choice model and provide some insight into what strategies work best.Elizabeth Hoy is director of health systems management and a founder of the Institute for Health Policy Solutions (IHPS) in Washington, D.C. She works with organizations to design and implement health purchasing cooperatives, focusing in particular on health plan contracting and the development of information to support consumer choice. Elliot Wicks, a senior fellow with the Economic and Social Research Institute, also works as a senior consutant with the Michigan-based consulting firm Health Management Associates. He coauthored this paper while at the IHPS. Rolfe Forland, a senior analyst at the IHPS, assists public and private employers in the design and implementation of all aspects of health purchasing cooperatives. He also researches and analyzes issues regarding state and federal insurance reforms, provider-organized delivery systems, and multiple-employer welfare arrangements.

Informing Consumer Decisions in Health Care: Implications from Decision‐Making Research

“…Some employers have adopted this approach as an explicit strategy designed to facilitate consumer choice. Employees are able to focus their choice on value (cost and quality) when plan type and benefit package are held constant (Hoy, Wicks, and Froland 1996).…”

What Do Consumers Want and Need to Know in Making Health Care Choices?

“…Studies over the past several years have contributed to our understanding of what consumers know and do not know about their health plan choices and health delivery system context as well as what information consumers prefer to have. Yet, there is still much to learn about how consumers make decisions, what demographic and other differences there are in information preferences and decision-making styles, and the effectiveness of consumer report cards or other information in the choice process (EdgmanLevitan and Cleary 1996;Hibbard, Sofaer, and Jewett 1996;Hoy, Wicks, and Forland 1996;Isaacs 1996;Jewett and Hibbard 1996;Scanlon, Chernew, and Lave 1997).…”

“…Educating consumers about the current health care context and how to understand and use performance indicators is critical to increasing the rationality of consumer decision making Gibbs, Sangl, and Burrus 1996;Hoy, Wicks, and Forland 1996;Jewett and Hibbard 1996;Sangl and Wolf 1996). Most consumers will need background information that explains (1) that health plans are care delivery systems as well as insurance products and (2) that plans, as well as providers and patients, can affect quality (McGee, Sofaer, and Kreling 1996).…”

“…And, since research consistently shows that some people will want more information than others, the report card should provide several levels of detail, with a road map to help people navigate (Hoy, Wicks, and Forland 1996).…”

Marketwatch: Pooled purchasing: who are the players?

“…They also are expected to afford more choices to employees, both in the number of plans offered and especially in access to health maintenance organizations (HMOs) for employees in small groups. 4 Employers participating in pools are expected to provide workers with more information about their health plan options, and particularly about the quality of health plans. 5 Finally, pooled purchasing is expected to lower premium costs-at minimum for participating employers, and possibly through spillover effects to the rest of the market.…”