By comparison, the market shares of HMOs and PPOs increased about 25 percent. Small employers, those with fewer than fifty workers, today are as likely as large employers to offer managed care. The researchers found that the growth among small firms came at the expense of conventional coverage. There was only a small increase in the number of firms that offered more than one health plan. Sixty-eight percent of small businesses providing coverage, offered only a single managed care plan.
Several factors appear to have led small firms to switch coverage.
First, the deductible in the dropped conventional plans were higher than average. Second, conventional plan premium increases, prior to being dropped, were about 5 percentage point higher than the market value average. The findings are based upon nationally representative surveys of public and private sector employers conducted in 1993 and 1995. The authors' ongoing research examines the effects of premium declines, state insurance reform laws, and influence of large firms on the switch among small firms. The authors are Gail Jensen Ph.D., Wayne State University in Detroit, Michigan, Michael Morrisey, Ph.D., professor and director of the Lister Hill Center for Health Policy at the University of Alabama at Birmingham, Alabama, Shannon Gaffney, Derek Liston, KPMG Peat Marwick in Oakland, California.