High-Deductible Insurance: Two-Year Emergency Department and Hospital Use

High-deductible health plan members had sustained reductions in emergency department visits over 2 years but initial reductions in hospital utilization and costs were not sustained.
Published Online: October 07, 2011
J. Frank Wharam, MB, BCh, BAO, MPH; Bruce E. Landon, MD, MBA; Fang Zhang, PhD; Stephen B. Soumerai, ScD; and Dennis Ross-Degnan, ScD

Objectives: To determine the 2-year impact of high-deductible health plans (HDHPs) on highacuity, expensive medical care.

Study Design: Retrospective pre-post, with propensity score–matched comparison group.

Methods: We studied emergency department visits, hospitalizations, and related expenditures among 15,847 HMO members for 1 year before and up to 2 years after an employer-mandated switch to HDHPs, compared with 15,847 propensity-matched controls who remained in HMOs. Members were aged 1 to 64 years and insured between 2001 and 2008.


Results: Emergency department visits among HDHP members declined by 15.0% and 15.7% from baseline to the first and second follow-up years, respectively (95% confidence intervals −21.1% to −8.4% and −24.1% to −6.4%, respectively). Rates of nonemergent visits declined significantly in both years (−19.6% [−28.2% to−9.9%] and −18.1% [−29.8% to −4.4%], respectively), while intermediate-severity visits declined to a lesser degree (−13.4% [−23.0% to −2.5%] in the first and −10.9% [−24.4% to 5.1%] in the second follow-up year). Reductions in emergent visits were not detectable in either the first or second follow-up year (−9.7% [−26.9% to 11.5%] and −15.3% [−36.8% to 13.3%], respectively). Hospitalization rates decreased in the first follow-up year (−22.8% [−33.8% to −10.0%]), but hospitalization and cost reductions were not detectable by the second follow-up year (−11.8% [−27.9% to 7.9%] and 1.9% [−22.2% to 33.4%], respectively).


Conclusions: HDHP members experienced sustained reductions in emergency department visits over 2 years, but reductions in hospital utilization and costs were not apparent by the second year. Longer-term studies that assess deferred utilization and its effects are needed.


(Am J Manag Care. 2011;17(10):e410-e418)

This is the first study to examine the longer-term impact of high-deductible health plans on high-acuity, expensive medical care. Policy makers should consider closely monitoring enrollees for unintended consequences of cost sharing.


  •  High-deductible health plans are expanding at unprecedented rates.


  •  High-deductible health plan members who remained enrolled for up to 2 years had fewer, mostly nonemergent visits to the emergency department.


  •  Initial large reductions in hospital utilization among high-deductible health plan members diminished by the second year.
Payers1 and employers2 are increasingly turning to high-deductible health plans (HDHPs) to control rising health care costs. Compared with traditional employer-based plans, HDHPs have relatively low premiums but subject most services to annual deductibles of at least $1000.2 HDHPs have shown unprecedented growth1; membership tripled between 2006 and 20101 and 27% of workers now have HDHPs.2 National health insurance reform could cause an “explosion” 3-5 in HDHP growth.

The effects of HDHPs on healthcare utilization, costs, and health are controversial. Some suggest that HDHPs will reduce inappropriate medical services, control cost trends, and improve health outcomes.6-10 Others are concerned that HDHPs will decrease necessary healthcare, causing adverse health outcomes and increased longer-term costs.11-15

Prior studies including the RAND Health Insurance Experiment suggest that increased cost sharing reduces use of both appropriate and inappropriate health services, including hospitalizations,16 essential medications,17,18 and preventive services.16,19 These effects may be associated with worse health outcomes.16-20 In contrast, patients primarily reduce discretionary services when emergency department care is subject to cost sharing, and adverse outcomes have not been detected.21-26

A previous 1-year follow-up study of emergency department and hospital utilization after HMO members were switched into HDHPs found that HDHP members primarily reduced low-severity emergency department visits after an initial emergency department visit, and hospitalizations also declined.25 We hypothesized that care patterns among HDHP members in their second year of experience would be a better indicator curve” that occurs under HDHPs.25



Harvard Pilgrim Health Care insures approximately 1 million individuals in the Northeast. In April 2002, Harvard Pilgrim began offering HDHPs with $500 to $2000 individual annual deductibles. Members of family plans also have family deductibles equal to twice their individual deductible. Full coverage begins for individuals their individual deductible or for family members when the family’s combined expenses exceed the family deductible. Most institution-based services (eg, emergency department and hospital care), laboratory studies, and imaging procedures are subject to the deductible. Members have a $20 copayment for most outpatient visits (independent of reaching the deductible). When HDHP member spending is below the deductible, healthcare providers bill patients directly at health plan–negotiated rates including for costs of emergency department care. After members exceed the deductible spending level, they have a $100 copayment for emergency department care that is waived if they are hospitalized. Employers purchasing the HDHPs may opt to combine them with a Health Reimbursement Arrangement. This allows employers to place money into an account to reimburse employees for out-of-pocket health expenses.

The traditional HMO members we included had varying in-network emergency department and outpatient copayments (between $30-$100 and $5-$25, respectively). Inpatient copayments ranged from $0 to $1000 with a median of $250.

Study Groups

HDHP Group. We identified Massachusetts members aged 1 to 64 years insured by Harvard Pilgrim between April 1, 2001, and February 28, 2008, with at least 1 year of continuous enrollment in a traditional HMO plan followed by at least 6 months in the HDHP. We chose members whose employers offered only a single health plan and who remained with the same employer for the entire period. Members were therefore unable to self-select their health plan. We included members from employers who bought plans directly from Harvard Pilgrim as well as from employers who purchased Harvard Pilgrim plans from independent brokers (“association” plans). We excluded members from employers that offered health plans from other insurers. This left an initial HDHP cohort of 16,472 members. We identified an index date for each member (the HDHP switch date), a 12-month baseline period, and a 6- to 24-month follow-up period.

We excluded 125 members with missing descriptive data including geocoded education and poverty levels, family versus individual insurance plan, employer category, baseline copayment levels, and whether the employer offered health insurance exclusively through Harvard Pilgrim.

HMO Group. To identify a control group, we first developed a pool of Harvard Pilgrim members from Massachusetts employers who were enrolled in traditional HMO plans during the same April 2001 to February 2008 eligibility period and whose employers did not offer the choice to enroll in an HDHP, any other Harvard Pilgrim benefit type plan, or plans from insurers other than Harvard Pilgrim for at least 18 months during their eligibility. We matched 8 members from this control pool to the HDHP member sample (before the exclusions above) based on contemporaneous enrollment, adult/child status, and whether the member was in an association plan. Each matched control member was then assigned the same index date and had the same baseline and follow-up periods as the matched HDHP member.

From this initial 111,014-member control pool we excluded 881 members with missing descriptive data and 13,590 members (12.2%) whose employers added a small deductible ($50-$100) or increased emergency department copayments at the index date. In addition, we censored the experience of 5810 control members after their first follow-up year because their employers added a small deductible or increased emergency department copayments in the second follow-up year. After these exclusions, the control pool comprised 96,543 members.

Propensity Score Matching. We then created propensity score models that predicted the likelihood of enrolling in an HDHP versus remaining in a traditional HMO after the baseline year. Propensity score matching is a well-established method for generating a control group with a similar likelihood of being exposed to a given “intervention” (in this case, shifting to HDHP coverage) based on measured characteristics when individuals have not been randomly allocated into study groups.27-30

In preparation for propensity score matching, we determined the variables that predicted employer choice into an HDHP in the overall cohort. We found that all variables we tracked (age; sex; Adjusted Clinical Groups morbidity31; family vs individual plan; census-block education and poverty level; employer type; baseline outpatient, emergency department, and hospital copayment levels; year of index date; and baseline member and health plan expenditures) predicted the choice of an HDHP at a statistically significant level.

We matched HDHP members to HMO members using 1 to 1 caliper matching without replacement.30 Caliper matching selects the control with the propensity score closest to that of the case, but only if the control’s score is within a predefined distance (caliper) of the case.30 Therefore, cases might not be matched to any controls; those cases would be dropped from the sample to avoid inappropriate matches. Caliper matching “without replacement” does not allow selecting the same control as a match more than once.30 We used a caliper width equal to 0.6 of the pooled standard deviation of the propensity score, which has been found to eliminate the majority of bias due to measured confounding variables.30,32

Our final study group included 15,847 HDHP members and their matched controls.

Emergency Department Utilization

We identified emergency department claims from Harvard Pilgrim’s claims database and used a validated25,26 modification of the emergency department visit classification algorithm of Billings and colleages33 to categorize visit severity as nonemergent, intermediate, or emergent. This algorithm and a method of developing clinically meaningful visit clusters using Clinical Classifications Software34 have been described in a previous report.25 To determine emergency department costs, we summed annual expenditures paid by members and Harvard Pilgrim for members’ emergency department use.

Hospital Utilization

We identified hospitalizations based on health insurance claims, and we calculated length of hospital stay. We excluded hospitalizations with the same admission and discharge date because these represent day procedures or surgeries such as colonoscopy or hernia repair. Multiple studies have used hospitalization rates or length of stay as proxy measures of patient morbidity.18,20,22,24,35-37 We calculated mean length of stay and summed annual hospitalization days per member. To assess whether members deferred needed ambulatory care, we measured ambulatory care–sensitive hospitalizations using the Agency for Healthcare Research and Quality Prevention Quality Indicators algorithm.38,39 Prevention Quality Indicators detect International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM) codes indicating potentially preventable hospitalizations for 14 conditions.38 Prevention Quality Indicators have been used in multiple academic studies.40,41

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