Comparing Public and Private Choices of Managed Health Care Plans: Rhetoric versus Reality

Abstract

The rhetoric is that the public sector provides broader coverage and more affordability of health benefits to its employees than the private sector. This study examines the reality of public and private health plans. It focuses specifically on the three types of managed care plans: Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPO), and Point-of-Service (POS) plans. An examination of health care benefits is especially important given the double-digit rise in premiums since 2001. This article first focuses on the literature showing differences in health benefits in the public sector compared with the private sector. The literature on the factors that influence choice of managed care plans are also examined. The results reveal that public sector health care costs are slightly higher and fewer plans are offered to its employees. There are fewer alternative health care options, such as high deductible health plans and health savings accounts, as compared with what is offered by the private sector. In addition, the logistic regression results reveal that there are significant differences between the public and private sectors in types of plans offered, controlling for organizational and community factors, characteristics of health care plans, and opinions of human resources (HR) managers on controlling costs.