Insurers' Competitive Strategy and Enrollment in Newly Offered Preferred Provider Organizations (PPOs)

Published in: Inquiry, v. 44, no. 4, Dec. 2007, p. 400-411

Posted on RAND.org on December 01, 2007

by Richard A. Hirth, Kyle Grazier, Michael E. Chernew, Edward N. Okeke

Read More

Access further information on this document at www.inquiryjournalonline.org

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

While early growth in preferred provider organizations (PPOs) coincided with growth of managed care generally, recent expansion has come primarily at the expense of other managed care plans. Little is known about the micro behavior underlying these trends. In 2005, University of Michigan employees were offered PPOs for the first time by vendors who also offered other plans. PPOs helped the offering vendors maintain or increase their total enrollment share. PPOs were most attractive to workers who previously had chosen less managed plans. Because PPOs drew few enrollees from health maintenance organizations (HMOs), there was little evidence of a backlash against managed care in the context of the University of Michigan employee group.

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.

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.