Competition and health plan performance: evidence from health maintenance organization insurance markets.
OBJECTIVE
We sought to assess whether health maintenance organizations (HMOs) operating in competitive markets, or markets with substantial HMO penetration, perform better on the standardized Health Plan Employer Data and Information Set (HEDIS) and Consumer Assessment of Health Plans Survey (CAHPS) measures.


METHODS
We performed a secondary analysis of nonexperimental, cross-sectional data.


METHODS
Data were obtained from a variety of sources, including the National Committee for Quality Assurance (NCQA), Interstudy, the Area Resource File, the U.S. Office of Personnel Management, and the U.S. Department of Labor.


METHODS
Multiple Indicator Multiple Cause models were used to simultaneously estimate 6 latent quality variables from 35 HEDIS and CAHPS measures and to relate these latent variables to HMO competition and HMO penetration while controlling for other health plan and market characteristics.


RESULTS
Greater competition, as measured by the Herfindahl index, was associated with inferior health plan performance on 3 of 6 quality dimensions. Plans in markets with greater HMO penetration perform better on HEDIS- but not CAHPS-based dimensions of performance. Plans that make their data available publicly perform significantly better on both the HEDIS and CAHPS domains, performing one third to three quarters of a standard deviation better than plans that don't make their results available publicly.


CONCLUSIONS
Plans in more competitive markets in 1999 did not achieve better quality after controlling for other important covariates, although plans in markets with a high degree of HMO penetration are performing better on the HEDIS quality dimensions. Although our study design cannot determine causality, the results suggest reason to revisit the belief that competition among HMOs will inherently improve quality.
Scanlon
Dennis P
DP
Health and Public Policy Administration, Pennsylvania State University, University Park, Pennsylvania 16802-6500, USA. dpscanlon@psu.edu
Swaminathan
Shailender
S
Chernew
Michael
M
Bost
James E
JE
Shevock
John
J
D002391:Catchment Area, Health; D003258:Consumer Behavior; D003430:Cross-Sectional Studies; D019468:Disease Management; D004465:Economic Competition / Q000706:statistics & numerical data*; D005260:Female; D006279:Health Maintenance Organizations / Q000191:economics* / Q000592:standards*; D006801:Humans; D017589:Immunization Programs / Q000191:economics / Q000592:standards; D017059:Models, Econometric; D011787:Quality of Health Care; D014481:United States; D014932:Women's Health Services / Q000191:economics / Q000592:standards