Impacts of managed care patient protection laws on health services utilization and patient satisfaction with care

Health Services Research, June, 2005 by Frank A. Sloan, John R. Rattliff, Mark A. Hall

Results for effects of specific laws are interesting, but the larger effects are even more so. The arguments in the political arena were that state and federal governments needed to act to preserve patient choice of provider and to allow physicians to exercise their clinical judgment on behalf of patients, free of interference from health plans. Our results suggest that the states' legislative initiatives did not improve patient satisfaction with care or increase use of care. Of course, these legislative initiatives could have caused managed care organizations to change their operating procedures even before laws were enacted in states in which they did business. Our analysis could not capture this spillover effect.

We performed several robustness tests to gauge the sensitivity of our findings to changes in specification and sample. First, in our main analysis, we excluded families with private coverage from employment at an establishment with 1,000 or more employees as well as government employees in order to exclude portions of the population that often are not subject to these laws. Since physicians may treat all patients similarly, irrespective of their insurance status, it is possible that the patient protection laws affected all patients in the state, rather than just those specifically covered by the laws. Therefore, we reestimated the equations, eliminating the sample exclusion. Overall, the results were very similar to the ones we report.

Second, laws other than patient protection laws may have affected patient satisfaction and utilization in ways that offset or cloud the effects of patient protection laws. To explore whether this was the case, we included additional explanatory variables for caps on payments for noneconomic damages in medical malpractice lawsuits, and for insurance benefit mandates. Since we used state fixed effects and our analysis was limited to 1996-2001, the only relevant changes were those that occurred during that time span. We included two variables for noneconomic damage caps, one for the states that implemented a cap during the observational period, and the other for states that dropped caps. Only three states adopted caps or dropped caps during these years (ATRA 2004).

Mandated benefits have increased greatly in the states over the past 25 years (Jensen and Morrisey 1999). We added explanatory variables for five benefit mandates. These mandates were selected on the basis of having changed during the observational period as well as prior research indicating which mandates had substantial effects on HMO and indemnity premiums (Henderson et al. 2003). Only a few statistically significant effects were found. Of the 120 new coefficients estimated, only six were significant (p<0.05). Most of these effects, several of which were nonintuitive, were probably chance occurrences. More importantly, adding these variables had no material impact on the coefficients of greatest interest, those for the patient protection laws.

Third, we experimented with alternative lag structures since the effects of these laws may not appear for several years after enactment. We included a variable for the time since the law was implemented, replacing the postimplementation binary variable. The new variable measured the number of years since implementation, and was zero otherwise. The results were mixed, in that one law which previously had a statistically significant effect was no longer significant, but another law that was previously insignificant became significant. None of the joint significance tests with the new specification rejected the null hypothesis of no relationship. In addition, we ran the regressions using a set of seven mutually exclusive binary variables to estimate effects of the legal changes on a year-by-year basis (e.g., 1-year-before; year-of; 1-year-after; etc.).