CHANGES IN BENEFIT PAYMENTS AND HEALTH-INSURANCE PREMIUMS AMONG FIRMSSWITCHING HEALTH-INSURANCE CARRIERS

Employer-purchased group health insurance is a major source of funding in the US healthcare system, accounting for approximately one third o f each healthcare dollar spent, Surprisingly, little is known about em ployers' behavior in purchasing health insurance or the circumstances leading employers to switch health insurance carriers. We descriptivel y analyzed data for a cohort of 95 insured groups between 1985 and 199 1 to determine the frequency with which employers switch health insura nce carriers and the growth pattern in premiums and benefit payments b efore the switch was made. Thirty-seven percent of groups switched car riers during the study period, with at least five groups switching eac h year from 1987 through 1991, The groups that switched insurance carr iers experienced higher average annual rates of growth in benefit paym ents than those that did not switch (18% versus 11%), Groups that swit ched did not have significantly higher observed premium growth rates t han those that did not switch, suggesting that employers decided to sw itch insurers before absorbing an increase in premiums, However, some firms that switched experienced below average increases in both benefi t payments and premiums, indicating that premiums and anticipated prem ium increases are not solely responsible for the decision to switch he alth insurance carriers.