Strong Opinions Held about the Tradeoff Between Choice of Providers and Cost of Care

During the late 1990s, millions of Americans were wrestling with a fundamental tension in their health coverage: the desire to freely choose their own doctors and hospitals versus the appeal of lower out-of-pocket costs through plans that restricted provider choice. Survey results from the Center for Studying Health System Change captured the depth of this conflict. A majority of adults surveyed -- 58 percent -- agreed that they would accept a limited selection of physicians and hospitals if it meant reduced deductibles, copayments, and other personal health care expenses. Yet a large minority, 40 percent, disagreed.

These were not lukewarm positions. Among those surveyed, 23 percent expressed strong willingness to accept restricted choice, while 24 percent were strongly opposed. A strikingly small share -- just 2 percent -- had no preference either way. This polarization showed little geographic variation across the 12 randomly selected metropolitan areas in the Community Tracking Study. The proportion willing to trade choice for savings ranged from a low of 50 percent in Newark, New Jersey, to a high of 63 percent in Little Rock, Arkansas.

Differences by Income, Race, and Age

Although community-level variation was modest, demographic breakdowns revealed sharp differences in attitudes toward the choice-cost tradeoff.

Income played a clear role. As household income rose, willingness to accept limited choice declined steadily. Among people living below the poverty line, 68 percent were prepared to give up some provider choice to save money. Among the highest earners -- families with incomes at or above four times the federal poverty level -- only 50 percent felt the same way. The pattern was intuitive: for those with the tightest budgets, cost savings took priority over provider selection.

Race revealed even starker differences. African Americans were the group most willing to sacrifice some choice, with 74 percent expressing that willingness. Among Hispanics, 63 percent agreed, while only 55 percent of whites were willing to accept constraints on their provider options. Because average incomes among African Americans and Hispanics were substantially lower than among whites, these racial differences in attitude may have partly reflected underlying income disparities.

Age was another strong predictor. Younger adults were the most open to trading choice for cost savings: 67 percent of those aged 18 to 34 were willing. That figure dropped steadily with age, falling to just 43 percent among the elderly. Younger adults were more likely to have grown up in a managed care environment and may have been more accustomed to plan-imposed limits on provider selection. They also tended to use less health care and had fewer financial resources -- factors that probably made cost savings more attractive and provider choice less pressing.

Implications for Employers and Purchasers

The deep split in public opinion on the choice-versus-cost question carried practical consequences for employers and other health care purchasers. The findings suggested that no single health insurance product could satisfy everyone. Employers that offered only one plan were likely to leave a sizable segment of their workforce unhappy -- either those who wanted broader provider access or those who preferred lower costs. This dynamic may have helped explain the growing popularity of point-of-service (POS) products during this period, which offered relatively affordable in-network benefits while still preserving the option to see out-of-network providers at higher cost.

The findings also carried implications for Medicare managed care. Because elderly Americans were the least willing of any age group to give up provider choice, the data suggested that Medicare beneficiary enrollment in managed care plans would grow -- but always remain lower than managed care participation rates in the general population.

As the health system continued to evolve and the public debate over provider choice intensified, the Center planned to track how attitudes shifted over time in response to changing market conditions and policy interventions.

Sources and Further Reading

This Data Bulletin draws on preliminary findings from the Household Survey, a nationally representative telephone survey of the civilian, non-institutionalized population conducted in 1996 and 1997 as part of the Community Tracking Study. The survey encompassed 43,771 persons in 23,554 families. All comparisons and differences described in this analysis are statistically significant at the p<0.05 level.