Who Is Likely to Switch Health Plans?

Originally published as Data Bulletin No. 18 by the Center for Studying Health System Change (HSC), July 2000. HSC was a nonpartisan policy research organization funded principally by the Robert Wood Johnson Foundation.

About one in six consumers with private health insurance changed plans over a one-year period between 1996 and 1997, according to Household Survey findings from the Center for Studying Health System Change. The vast majority of people who switched did so for reasons outside their control. More than two-thirds changed plans either because they changed jobs or because their employers altered the available plan offerings. Fewer than one in four switched because their new plan cost less or offered better services.

Switching Between Plan Types

Overall, more people switched into health maintenance organizations (HMOs) than into more traditional plan types, consistent with broader enrollment trends at the time. Close to one-quarter of those who changed plans moved from a non-HMO to an HMO, while 11 percent moved the opposite direction. Those who switched to an HMO were more likely than other plan changers to cite cost as the driving factor. Notably, despite the growing consumer backlash against managed care, people who left HMOs were no more likely than other plan changers to say they switched because their new plan offered better services.

Demographic Factors

Several groups that faced greater barriers to accessing care were less likely to change health plans. Near-elderly adults (ages 55 to 64), African Americans, Hispanics, and people in fair or poor health all switched plans at lower rates. Less-educated individuals were also less likely to switch. When African Americans or those in poor health did change plans, however, they were more likely to switch to an HMO. Previous HSC research had found that African Americans expressed greater willingness than whites to accept less provider choice in exchange for lower costs, a finding consistent with their higher rate of switching to HMOs. People with serious health problems who switched may have preferred HMOs as a way to keep out-of-pocket costs down. These patterns suggest that HMO favorable selection practices, to the extent they existed, were not necessarily a barrier to everyone with serious health problems.

Effect on Source of Care

Twenty-three percent of those who changed health plans also changed their usual source of care -- whether a doctor, nurse, other health professional, or specific clinic. The rate of provider switching was somewhat higher, at 29 percent, among people who moved between two different HMOs. That most plan changers kept their usual source of care suggested considerable overlap among provider networks. Another possibility was that consumers chose to pay higher copayments or even the full cost of out-of-network visits to maintain a relationship with a physician they had been seeing for years.

Policy Implications

Most plan changes were involuntary, driven by job changes or employer decisions rather than consumer preference. Very few privately insured people -- about 2 percent -- were forced to change their health care provider as a result of switching plans, and the various patients' bills of rights proposed during this period called for greater provider continuity and access, which would likely prevent that figure from growing. However, if health insurance premiums resumed climbing steeply, demand for lower-cost plans with tighter networks could increase, potentially leading to more involuntary plan and provider switching.

Sources and Further Reading

HSC Community Tracking Study Household Survey, 1996-1997. | Cunningham, Peter J., and Linda Kohn, "Health Plan Switching: Choice or Circumstance?" Health Affairs, Vol. 19, No. 3 (May/June 2000).