The 1980s might be called the decade of awakening private sector interest in containing medical care costs. Employers have begun to take initiatives to control their outlays for health insurance premiums paid as a fringe benefit. Employers are redesigning benefit plans to increase consumer cost sharing, offering alternative health care plans, and changing the methods used to finance premiums. Since insurance benefits provided by employers constitute about one-third of all health care expenditures, these private sector initiatives are viewed as a new potential mechanism to moderate the spiralling rate of inflation in the health care sector. The proposed study has four objectives: (1) to describe what employers are doing to control their health benefit costs, (2) to estimate the savings associated with alternative cost cutting measures, (3) to estimate the demand for particular innovations by medium and large sized firms, and (4) to assess the implications of our findings for policy reforms relating to employer-based health insurance. The project will utilize Bureau of Labor Statistics data, 1981-1984, on the benefit offerings of some 1200-1500 firms nationwide. Three analyses are planned. The first is a cross tabular examination of the extent and kinds of initiatives that employers have taken over the period 1981 through 1984. The second is a regression analysis of premiums that includes benefit provisions and other plan characteristics among the explanatory variables. The third is a regression analysis of the demand for selected benefit characteristics. The implicaitons of our results for policy reforms affecting employers will be examined in detail.
