March 19, 2002 (The Editor’s Desk is updated each business day.)

Decline in traditional fee-for-service health plans in 1990s

Participation in traditional fee-for-service health care plans decreased from 66 percent of full-time employees with health care coverage in 1991 to 26 percent in 1997.

[Chart data—TXT]

In contrast, participation in preferred provider organizations (PPOs) rose from 16 percent in 1991 to 40 percent in 1997.  Participants in PPOs can choose any health care provider, but they receive higher benefits for services rendered by designated providers.  

In 1991, 17 percent of participants in health care plans were enrolled in health maintenance organizations.  This proportion increased to 33 percent in 1997.  Typically, HMOs are independent organizations that finance and administer health care services; these plans require the participant to seek care only from specific care providers.

These data are from the Employee Benefits Survey. Data in this article are for full-time employees with medical care coverage in medium and large private establishments.  For more information, see "Managed Care Plans and Managed Care Features: Data from the EBS to the NCS" (PDF 55K), by Cathy A. Baker and Iris S. Diaz, Compensation and Working Conditions, Spring 2001.