Public sector employer evaluation of health plans in the United States

Recently, public employers have experimented with different types of health plans including Indemnity, Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO) plans. This study examines factors that are related to municipal employer satisfaction with each type of plan. The data are drawn from the International City/County Management Association (ICMA) of municipal healthcare practices in 3301 US cities. Many more cities than anticipated used only indemnity plans, although there was widespread experimentation with managed care plans. Jurisdictions that offered only one type of plan showed highest satisfaction levels with HMOs, followed by PPOs and indemnity plans. In jurisdictions that offered multiple plans, patterns of satisfaction varied with the types of plans involved. Three factors were found to be correlated with employer plan satisfaction. As employee complaints and cost to the jurisdiction increased, plan satisfaction decreased. As the number of services offered by a plan increased, plan satisfaction also increased. While most municipalities contracted for health plans as individual employers, a small proportion contracted as part of a consortium: there was no statistically significant difference in satisfaction levels between the two arrangements. (C) 1998 John Wiley & Sons, Ltd.