Managing Costs, Managing Benefits: Employer Decisions in Local Health Care Markets

Objectives.  To better understand employer health benefit decision making, how employer health benefits strategies evolve over time, and the impact of employer decisions on local health care systems.
Data Sources/Study Setting.  Data were collected as part of the Community Tracking Study (CTS), a longitudinal analysis of health system change in 12 randomly selected communities.
Study Design.  This is an observational study with data collection over a six-year period.
Data Collection/Extraction Methods.  The study used semistructured interviews with local respondents, combined with monitoring of local media, to track changes in health care systems over time and their impact on community residents. Interviewing began in 1996 and was carried out at two-year intervals, with a total of approximately 2,200 interviews. The interviews provided a variety of perspectives on employer decision making concerning health benefits; these perspectives were triangulated to reach conclusions.
Principal Findings.  The tight labor market during the study period was the dominant consideration in employer decision making regarding health benefits. Employers, in managing employee compensation, made independent decisions in pursuit of individual goals, but these decisions were shaped by similar labor market conditions. As a result, within and across our study sites, employer decisions in aggregate had an important impact on local health care systems, although employers' more highly visible public efforts to bring about health system change often met with disappointing results.
Conclusions.  General economic conditions in the 1990s had an important impact on the configuration of local health systems through their effect on employer decision making regarding health benefits offered to employees, and the responses of health plans and providers to those decisions.