Private Health Purchasing Practices in the Public Sector: A Comparison of State Employers and the Fortune 500

Health Affairs--March/April 2004
Vol. 23, No. 2
March/April 2004
Maxwell, J., Temi,n P., and T. Petigara
pp. 182-90

State governments are influential purchasers of health benefits but have not been studied extensively. In a recent survey of senior benefit managers, we examine the extent to which states have followed the private-sector approach to purchasing health care. We found that states have adopted "industrial purchasing" practices similar to those of large private employers but offer greater choice of carriers and pay a higher percentage of premiums. Unions continue to influence health care purchasing in both the public and private sectors. Double-digit increases in health costs and the current budget crisis may force states to align their purchasing practices with the private sector to cut costs.

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