The purpose of the proposed research is to evaluate the effectiveness of managed care cost containment strategies in the group health benefit plans of private and public sector employers in the U.S. Since 1987, employer sponsored group plan health insurance costs have grown at annual rates in excess of 15% after growing at well below double digit rates in the preceding three years. Have the managed care cost containment strategies celebrated in the early 1980s failed? More specifically, are health maintenance organizations, preferred provider organizations, broader use of coinsurance and deductibles, and utilization review programs ineffective in constraining the growth of employer sponsored group health plan costs? Two closely related questions to be covered in this research are: Have HMOs become a more effective cost containment option since the 1988 Health Maintenance Organization Amendments? How sensitive are the plan choices of employees (traditional indemnity, HMO, or PPO) to the contribution, deductible, and coinsurance requirements of the different plans? The data that will be analyzed are the Foster Higgins annual Health Care Benefit Surveys, 1986-1992. These surveys collectively contain data from over 4,000 public and private sector employers in the U.S. on employee health care benefit costs, on preferred provider, health maintenance organization, and flexible benefit options, on coinsurance and deductibles, and on mental and dental health coverage, home and hospice care, wellness/educational programs and other benefit characteristics that might influence group health plan costs. In addition, they contain data on the illness risk of each firm's insured employees.