Nonprice Competition and Quality of Care in Managed Care

The New York SCHIP Market

Published In: HSR, Health Services Research, v. 43, no. 3, June 2008, p. 971-987

Posted on RAND.org on June 01, 2008

by Harry H. Liu, Charles E. Phelps

Read More

Access further information on this document at Blackwell Publishing

This article was published outside of RAND. The full text of the article can be found at the link above.

OBJECTIVE: To examine the effect of nonprice competition among managed care plans on the quality of care in the New York SCHIP market. DATA SOURCES: U.S. Census 2000; 2002 New York State Managed Care Plan Performance Report; and 2001 New York State Managed Care Annual Enrollment Report. STUDY DESIGN: Each market is defined as a county, and competition is measured as the number of plans in a market. Quality of care is measured in percentages using three Consumer Assessment of Health Plans Survey and three Health Plan Employer Data and Information Set scores. Two-stage least squares is applied to address the endogeneity between competition and the quality of care, using population as an instrument. PRINCIPLE FINDINGS: The authors find a negative association between competition and quality of care. An additional managed care plan is significantly associated with a decrease of 0.40-2.31 percentage points in four out of six quality measures. After adjusting for production cost, a positive correlation is observed between price and quality measures across different pricing regions. CONCLUSIONS: It seems likely that pricing policy is a constraint on quality production, although it may not be interpreted as a causal relationship and further study is needed.

This report is part of the RAND Corporation External publication series. Many RAND studies are published in peer-reviewed scholarly journals, as chapters in commercial books, or as documents published by other organizations.

Our mission to help improve policy and decisionmaking through research and analysis is enabled through our core values of quality and objectivity and our unwavering commitment to the highest level of integrity and ethical behavior. To help ensure our research and analysis are rigorous, objective, and nonpartisan, we subject our research publications to a robust and exacting quality-assurance process; avoid both the appearance and reality of financial and other conflicts of interest through staff training, project screening, and a policy of mandatory disclosure; and pursue transparency in our research engagements through our commitment to the open publication of our research findings and recommendations, disclosure of the source of funding of published research, and policies to ensure intellectual independence. For more information, visit www.rand.org/about/principles.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.