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MARKETWATCH
Private Health Purchasing Practices In The Public Sector: A Comparison Of State Employers And The Fortune 500
James Maxwell,
Peter Temin and
Tanaz Petigara
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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