Finding improved ways of containing health care costs has become a national concern. To date, there has been little systematic evaluation of cost containment initiatives, especially private initiatives, and knowledge about whether and how these initiatives achieve cost savings is not well developed. The proposed research, an outgrowth of a larger project funded by The Robert Wood Johnson Foundation, seeks to determine the effects of private cost containment health programs on utilization and expenditures. The cost containment programs being evaluated were established by a large private insurance carrier, which is collaborating in the project and providing data for the analysis. The programs include mandatory surgical screening, ambulatory surgery, pre-admission testing, and utilization review. The programs are compulsory; patients failing to a bide by established cost containment guidelines have their benefits reduced by a specified dollar amount or by a percentage of covered expenses. The proposed research will analyze claims data (already collected, aggregated and entered in computer files) for 262 insured groups, located throughout the country, 146 (55%) of which operated under one or more cost containment programs during 1984 and 1985. The unit of analysis is the insured group. The claims data provide detailed information on a quarterly basis about admissions, length of stay, hospital room and board expenses, hospital ancillary expenses, physician expenses, and other expenditures. The data have been pooled over time; approximately 1,520 observations are available for analysis. Data for 1986 are currently being collected, which, when added to the data file, will make over 2,000 observations available for analysis. To test hypotheses and estimate the effects of the cost containment programs, the proposed research will conduct a series of analyses (involving both cross-section and over-time comparisons) employing multiple regression models. The project has collected information about employee characteristics, benefit plan features (deductible, coinsurance rates, etc.) and market area factors (HMO penetration rate, hospital occupancy, etc.). An important aspect of the proposed research will be its ability to hold these factors constant while examining the impact of cost containment programs. The proposed research should contribute to our understanding of whether and how private cost containment activities achieve cost savings.
