Controlling Costs of Medical Care by Expanding Insurance Coverage

Abstract

Abstract Special benefits were provided without additional charge to a randomly selected group of 5000 subscribers of a Blue Cross plan. These benefits covered the costs of diagnostic and treatment services rendered outside hospitals. The experimental benefits did not affect hospitalization and patterns of care: no significant reductions were noted in admissions, days of stay and payments among the experimental and two control groups. Our observations support others indicating that coverage for ambulatory care does not reduce costs for hospital services as organized at present. Despite an intensive informational campaign, few subscribers and physicians were aware of the change of benefits. The expected relation between income and frequency of physician contact was not evident among those receiving special benefits. Of all the special benefits paid, 18 per cent were for psychiatric services to 0.7 per cent of the subscribers; 8.7 per cent of physicians in practice received 44 per cent of all special-benefit dollars.