High Deductible Plan Experience

The Employee Benefit Research Institute looked at the experience of a large employer in the United States after it adopted a full-replacement high-deductible health insurance plan, coupled with a health savings account.   (EBRI Report)   Currently over 20% of Americans covered by employer-based insurance is in one of these plans, so understanding their effects on costs and quality is important.  This particular employer’s experience was followed for four years after introduction of the plan and was compared with a matched control group from a second large employer that kept its traditional health plan design.  While there were two deductible levels available to employees, about 90% selected the highest one, $2150 per person and $4300 per family, which had no employee contribution to the premium.  The HSA had $700 deposited by the employer for employee only coverage and $1300 for family coverage.  The company had about 13,278 workers and dependents in the plan during the study period.  On an unadjusted basis the first year of the high-deductible plan, spending grew 7% compared with 29% growth in the control plan.  In the next two years it went up 22% and 16% for the study group but less than 10% in the control.  In the last year spending for the high-deductible enrollees grew at 5% compared to 10% in the control group.  On an adjusted basis to equalize factors other than spending, all categories of spending showed relative reduction for the high-deductible group except inpatient hospital, with drug and lab costs declining the most and also being the only categories that declined in all four years of the study.  At the end of the fourth year spending was still 6% below the level in the last year before the new plan was adopted.  The results from this single employer suggest that the most dramatic change in spending occurs in the first year of high-deductible plan adoption, but the reductions in spending persist for multiple years and are quite sizable.  Some of the reduced savings in the years after the first year is likely due to greater user experience with and understanding of the plans and the interaction with the HSA.  The lowest reductions of costs and use were found in the highest spending quintile, which suggests that those with chronic or serious health needs are not unduly impacted by these plans.