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Keywords:

  • For-profit ownership;
  • managed care;
  • trust;
  • multistate corporations;
  • utilization review

Objective. To compare the relative trustworthiness of nonprofit and for-profit health plans, using physician assessments to measure dimensions of plan performance that are difficult for consumers to evaluate.

Data Source. A nationally representative sample of 1,621 physicians who responded to a special topics module of the 1998 Socioeconomic Monitoring System Survey (SMS), fielded by the American Medical Association. Physicians assessed various aspects of their primary managed care plan, defined as the plan in which they had the largest number of patients.

Study Design. Plan ownership was measured as the interaction of tax-exempt status (nonprofit versus for-profit) and corporate control (single state versus multistate health plans). Two sets of regression models are estimated. The dependent variables in the regressions are five measures of performance related to plan trustworthiness: two related to deceptive practices and three to dimensions of quality that are largely hidden from enrollees. The first set (baseline) models relate plan ownership to trustworthy practices, controlling for other characteristics of the plan, the marketplace for health insurance, and the physician respondents. The second (interactive) set of models examines how the magnitude of ownership-related differences in trustworthiness varies with the market share of nonprofit plans in each community.

Data Collection. The 1998 SMS was fielded between April and September of 1998 by Westat Inc. The average time required for a completed interview was approximately 30 minutes. The overall response rate was 52.2 percent.

Principal Findings. Compared with more local nonprofit plans, for-profit plans affiliated with multistate corporations are consistently reported by their affiliated physicians to engage in practices associated with reduced trustworthiness. Nonprofit plans affiliated with multistate corporations have more physician-reported practices associated with trustworthiness than do for-profit corporate plans on four of five outcomes, but appear less trustworthy than locally controlled nonprofits on two of the five measures. The magnitude of these ownership-related differences declines as the market share of nonprofit plans rises: for two of the five measures, ownership-related differences in practices related to trustworthiness are entirely eliminated when the nonprofits enroll more than 30 percent of the local market.

Conclusions. The combination of for-profit ownership and multistate corporate control appears to consistently and substantially reduce physician-reported measures related to the trustworthiness of health plans. Because this is the fastest growing form of managed care, these results raise concerns about further erosion of trust in American health care. Preserving a substantial market niche for nonprofit plans appears to reduce this erosion and should be considered by policymakers as a strategy for restoring trust in the health care system.