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Healthcare Spending and Preventive Care in High-Deductible and Consumer-Directed Health Plans
Melinda Beeuwkes Buntin, PhD; Amelia M. Haviland, PhD; Roland McDevitt, PhD; and Neeraj Sood, PhD
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Healthcare Spending and Preventive Care in High-Deductible and Consumer-Directed Health Plans

Melinda Beeuwkes Buntin, PhD; Amelia M. Haviland, PhD; Roland McDevitt, PhD; and Neeraj Sood, PhD
Enrollment in high-deductible health plans is associated with reduced spending on healthcare and with moderate reductions in the use of preventive care.
This is the first study to date to demonstrate across a large number of carriers, employers, and plan designs that HDHP or CDHP plans significantly curb healthcare costs in the first year. Recent healthcare reform may create incentives to spur the growth in HDHPs or CDHPs, and our results suggest that a move to HDHPs or CDHPs might help policy efforts to bring healthcare costs under control.25 However, we need further research to determine whether the data herein represent 1-time savings or whether policy makers might use insurance benefit design as a tool to help slow the growth in costs.

Employers often make contributions to personal medical accounts to provide incentives to employees to switch to high-deductible plans, as high enrollments are necessary to capture substantial cost savings. Some have posited that such contributions would reduce the cost savings of HDHPs or CDHPs by undermining consumer cost sensitivity.26,27 However, this was not the case for HDHPs or CDHPs with moderate employer contributions. These HDHPs or CDHPs seem to reduce spending as much as plans with similar deductibles but no employer account contribution.

Health policy makers included provisions in the Patient Protection and Affordable Care Act to encourage greater use of preventive services. The Act required that cost sharing for proven preventive care services should be eliminated in Medicare and private insurance plans by 2010. However, our finding that preventive care service use is moderately lower in the first year of HDHP or CDHP enrollment, despite waiving the deductible, provides a cautionary tale for these reform goals. It suggests that, at least in the short run, eliminating the copayment for preventive services may not expand use. There are several possible explanations for this finding. A high deductible may have deterred patients from seeking care for health problems that would have prompted a referral for some preventive or screening procedure. Alternatively, patients could have sought preventive care outside of their plan, for example through immunization clinics. Finally, new enrollees might not have understood that preventive care was covered, and over time as people become more familiar with plan provisions, the use of benefit design to encourage preventive service use may be more successful. Nonetheless, our finding suggests that policy makers may wish to explore programs to reinforce the financial incentives to promote preventive service use.

To address the potential effect of reductions in preventive care on the scale observed herein, we used estimates by Maciosek et al (2006) of the quality-adjusted life-years (QALYs) associated with the cancer screenings we examined.28 The estimated reductions in cancer screenings among HDHPs or CDHPs would reduce QALYs among 10,000 HDHP or CDHP enrollees by 32 to 41 QALYs per screening compared with comparable control plan enrollees.

There are several limitations of our study. First, we focus only on the first-year experience in an HDHP or a CDHP. Second, the amount of information we examined about what kind of care is reduced is limited. For example, the RAND Health Insurance Experiment found that cost sharing reduced both necessary and unnecessary care. Our results suggest that some appropriate care, namely, preventive services, is reduced in HDHPs or CDHPs, but further exploration of how they produce cost savings is needed to assess whether HDHPs or CDHPs should be embraced as a cost-saving approach or introduced with caution (eg, as detailed by Wharam et al11 about colorectal cancer screenings). Third, family-level and firm-level selection remains the main threat to the validity of our conclusions, as with all observational studies of HDHPs or CDHPs.

Overall, our study findings suggest that HDHPs or CDHPs produce at least 1-time savings in the first year. The results highlight the need for further research to understand whether costs continue to grow more slowly for HDHP or CDHP enrollees and whether these enrollees increase their use of preventive care over time as they become more familiar with plan provisions.

We acknowledge helpful suggestions from the advisory group members for the grants received and advice from Ateev Mehrotra, MD, on the construction of our annualized preventive care measures. We acknowledge essential technical support from collaborators at the following 3 organizations: Thomson Reuters (Jon Conklin, MA; Kay Miller, BA; Kate Sredl, BA; and Deborah Banion, MPA), RAND Corporation (Al Crego, BA; Scott Ashwood, MA; Arkadipta Ghosh, PhD [now at Mathematica Policy Research]; Cha-ChiFan, PhD; and Perry Firoz, BS), and Towers Watson (Ryan Lore, MPP; Laura Laudenberger, MS; and Tina Brust, MS).


Author Affiliations: From RAND Corporation (MBB), Arlington, VA; RAND Corporation (AMH), Pittsburgh, PA; Towers Watson (RM), Arlington, VA; and Department of Pharmaceutical Economics and Policy (NS), University of Southern California, Los Angeles, CA.


Funding Source: Funding for this research was provided by the California Healthcare Foundation and by the Robert Wood Johnson Foundation.


Author Disclosures: The authors (MBB, AMH, RM, NS) report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.


Authorship Information: Concept and design (MBB, AMH, RM, NS); acquisition of data (MBB, RM); analysis and interpretation of data (MBB, AMH, RM, NS); drafting of the manuscript (MBB, NS); critical revision of the manuscript for important intellectual content (MBB, AMH, RM, NS); statistical analysis (MBB, AMH, NS); obtaining funding (MBB, AMH, RM); and supervision (MBB).


Address correspondence to: Amelia M. Haviland, PhD, RAND Corporation, 4570 Fifth Ave, Pittsburgh, PA 15213. E-mail:

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