title: Adverse selection and generosity of alcohol treatment benefits.
abstract: Concerns about attracting disproportionate numbers of employees with alcohol problems limit employers' willingness to offer health plans with generous alcohol treatment benefits. This paper analyzes two potential avenues of adverse selection, namely biased enrollment into plans and biased exit from plans offered by 57 employers between 1991 and 1997. We compare alcohol treatment use rates and costs of new and old enrollees between more generous and less generous plans; we also analyze disenrollment rates and enrollment duration by plan generosity for users and nonusers of alcohol treatment services. To avoid confounding benefit generosity with other plan features, in particular the use of managed care mechanisms, we compare plans that were administered in the same way by a large managed behavioral health care organization. Overall, we find no evidence of adverse selection into more generous plans. Contrary to the selection hypothesis, treatment costs of new members compared to old members are lower in firms with more generous treatment benefits than in firms with more limited benefits. Also, users of alcohol treatment services do not remain disproportionately enrolled longer in plans with generous benefits.
authors.affiliation: Division of Clinical and Prevention Research, National Institute on Alcohol Abuse and Alcoholism (NIAAA), Rockville, MD 20852, USA.
authors.forename: Katherine M
authors.initials: KM
authors.lastname: Harris
authors.forename: Roland
authors.initials: R
authors.lastname: Sturm
mesh_terms: D000437:Alcoholism / Q000191:economics* / Q000628:therapy*; D001524:Behavioral Medicine / Q000191:economics; D003258:Consumer Behavior / Q000191:economics* / Q000706:statistics & numerical data; D017047:Cost Sharing; D017049:Employer Health Costs; D006264:Health Benefit Plans, Employee / Q000191:economics* / Q000706:statistics & numerical data*; D017048:Health Care Costs; D006801:Humans; D007342:Insurance Benefits; D019458:Insurance Coverage; D015273:Insurance Selection Bias; D007358:Insurance, Psychiatric; D008329:Managed Care Programs / Q000191:economics; D008605:Mental Health Services / Q000191:economics*; D017059:Models, Econometric; D014481:United States; D014600:Utilization Review