The Writing Group for the Bypass Angioplasty Revascularization Investigation (BARI) Investigators (Alderman EL, Andrews K, Bourassa M, Brooks MM, Chaitman BR, Detre K, Faxon DP, Follman D. Frye RL, Hlatky M, Jones RH, Kelsey SF, Rogers WJ, Rosen AD, Schaff H, Sellers MA, Sopko G, Sutton-Tyrell K, Williams DO).

To what extent do employers subsidize the difference in prices among the insurance plans they offer their employees?

When employers offer multiple health plans at little or no cost to employees, what incentive do the employees have to select a less expensive plan? Economists have long contended that employers subsidize inefficiency when they contribute more for higher-cost health insurance plans than for lower-cost plans. These economists contend that such subsidies remove pressure on health plans and providers to maximize efficiency.Missing from these arguments have been data documenting the experience of employers that subsidize and do not subsidize the price of higher-cost plans.

Using data on the employer-sponsored health benefits of large firms, we examine the practice of paying more for more-expensive health plans in the United States. We also contrast premium growth among employers that engage in this practice. Although our data are not definitive on the question of whether employers subsidize inefficiency when they contribute more to higher-cost plans, they do provide a useful first step in analyzing health plan subsidization at the employer level.

This paper first describes our data and the incentive ratio, a tool developed to measure the extent to which an employer subsidizes the difference in prices among its health plans. Using the incentive ratio, we evaluate the scope of employer subsidies for higher-cost plans in the United States, and we analyze changes in a firm's overall health care costs based on whether an employer pays more for more-expensive health plans. Finally, we discuss policy implications based on our findings and provide an outline for further research.

Managed care is widely expected to affect physicians throughout the healthcare system. In this study, we examined the relationship between health maintenance organization (HMO) activity and the level of competition, autonomy and satisfaction of physicians who do not work for HMOs. We obtained data on physicians from the 1991 Survey of Young Physicians, which contains a nationally representative sample of physicians younger than age 45 who had 2 to 9 years of practice experience in 1991. We examined the relationships between HMO market share and perceived competition, autonomy, and satisfaction using multivariate logistic regression. The main outcome measures were perceived level of competition; several measures of physicians' freedom to undertake common tasks that might be treated by managed care (eg, hospitalizing patients, ordering tests and procedures); satisfaction with current practice situation; perceived ability to practice quality medicine; whether the physician would attend medical school again; and satisfaction with medicine as a career. We found that an increase of 10 percentage points in HMO market share was associated with a 28% increase in the probability that physicians will regard their practice situation as very competitive as opposed to somewhat or not competitive (P0.01). Examinations of the relationship between HMO market share and autonomy revealed few significant results. We found no evidence that increases in HMO activity adversely affect physician autonomy. Only a limited amount of evidence indicates that increases in HMO activity reduce the satisfaction of specialist physicians, and no evidence associates HMO activity with the satisfaction of generalists. Although physicians perceive HMOs as competitors, HMO activity has not had a strong negative effect on the autonomy and satisfaction of physicians.