Healthcare Spending and Preventive Care in High-Deductible and Consumer-Directed Health Plans
Published Online: March 22, 2011
Melinda Beeuwkes Buntin, PhD; Amelia M. Haviland, PhD; Roland McDevitt, PhD; and Neeraj Sood, PhD
Curbing increases in healthcare costs is a top priority for policy makers and for employers. Many believe that high-deductible health plans (HDHPs), also known as consumer-directed health plans (CDHPs), when coupled with personal savings accounts, might be one way to hold down costs. These plans, intended to make patients more cost conscious, are becoming increasingly popular, and healthcare reform may foster further growth in enrollment. As of 2009, 20% of Americans with employer coverage were enrolled in a plan with a deductible high enough to be eligible for a health savings account. Among those purchasing coverage directly, 47% had a deductible at least this high.1 A survey of large employers at the beginning of 2010 found that more than 54% offered at least 1 CDHP option, and another 7% were planning in 2011 to adopt one.2 Growth is expected from 2 sources, namely, CDHPs with low premiums offered through health insurance exchanges and more CDHP offerings in the employer market because of taxes placed on generous “Cadillac” plans.
Despite growing enrollment, little is known about the effects of HDHPs or CDHPs on healthcare costs and on the use of necessary care. Even less is known about the influence of specific HDHP or CDHP provisions, including deductible levels and account offerings.3 Both questions are of key importance for those who are newly insured through exchanges and for those who are selecting plans in the employer or individual market. Part of the problem is the lack of good pre-post data for persons enrolling in diverse HDHP or CDHP and conventional plans. Most evidence is limited to studies with data from a single carrier, a single employer, or a single year; therefore, the findings may not apply outside of those settings. A review of these studies concluded that moving consumers from traditional plans to high-deductible plans could result in significant savings; however, coupling these plans with funded personal accounts could reduce this effect.4 More recent work suggests that some CDHP plan designs might lead to higher spending over time, to discontinuation of chronic disease medications by patients, and to decreased use of office visits, hospitalizations, and emergency department care.5-8 Other peer-reviewed studies9-11 have found instances in which CDHP enrollment has no discernible effect on the use of preventive care. Reviewing a set of industry studies, the American Academy of Actuaries12 concluded that CDHP plans saved 12% to 20% in their first year compared with control plans, with no evidence that this was due to a reduction in necessary care.
This study is the first to date to use longitudinal data from a diverse set of carriers, employers, and HDHP or CDHP designs to investigate the first year effects on healthcare spending and on the use of preventive care. It also is the first study to examine the differential effects on these outcome measures of deductible levels, personal accounts, and employer account contributions.
We constructed a unique data set that included 2 years of enrollment and healthcare claims information for employees of 53 large US employers, 28 of which offered HDHPs or CDHPs to their employees. These employers offered health plans from all major and many smaller US insurance carriers. We defined a high deductible as $500 or more for single coverage and $1000 or more for family coverage in 2005, resulting in plans with a range of deductible levels and account provisions.
We estimated the differences between HDHP or CDHP and non–HDHP or CDHP enrollees using a difference-indifference propensity score–weighted method. We compared the 2004 to 2005 change in healthcare costs for families who first enrolled in HDHPs or CDHPs in 2005 (treatment families) with the change in healthcare costs for families who remained in conventional plans (control families). Therefore, the analysis controls for all time-invariant differences across treatment and control families such as inherent propensity to use healthcare or trust in physicians and modern healthcare. However, our results might be confounded if treatment and control families had different cost growth trajectories. To address this, we took 3 additional steps. First, we only included families as controls if they were not offered an HDHP or a CDHP. Those who were offered and declined an HDHP or a CDHP were excluded from the analysis. Second, we used propensity score weights to produce a control group similar to the treatment group based on a rich set of observed characteristics, including family type, geocoded income and educational levels, presence of major diagnoses, actuarial value of the health plan before enrollment, and industry of employment.13,14 Third, to account for residual confounding, we used these observed characteristics as covariates in multivariate regression models.
We also conducted an intent-to-treat analysis to estimate the effects on healthcare cost growth of the employer decision to offer HDHPs or CDHPs. Using difference-in-difference methods, we compared the 2004 to 2005 healthcare cost increases for employers who offered HDHPs or CDHPs in 2005 versus for employers who did not. We also estimated separate effects among employers who completely replaced their conventional plans with HDHPs or CDHPs.
Data Sources and Study Population
The study population consisted of active full-time employees and their dependents who were continuously enrolled for 2 full plan-years. A small proportion (0.4%) were dropped because of errors or omissions in their claims data. A slightly larger proportion (3.1%) were dropped because of errors in their enrollment information. This resulted in 808,707 families for analysis related to the effects of HDHP or CDHP enrollment and 981,973 families for analysis related to the effects of HDHP or CDHP offer.
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