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The Persistence of High-Deductible Plan Spending Reductions

By August 9, 2017Commentary

Another study of the effects of high-deductible health plans on health spending is carried in the Journal of Health Economics.   (JHE Article)   This one purports to address longer term effects by studying trends over three years.  Of course, the primary controversy around high-deductible plans is not just whether they reduce spending, but whether the reductions in use are just for unnecessary care or also for appropriate treatments.  The study covered 54 large employers with data from 2003 to 2007.  The researchers evaluated variables such as the size of the deductible, whether the plan was paired with some type of health savings account, employer contributions to the account and various sociodemographic and health factors about the employees covered.  The outcomes of interest were annual health spending per person, as well as individual utilization categories.  Comparisons were made between people enrolled and not enrolled in the HD plan.

The main effect of the high-deductible plan appears to have been a 6.6%, 4.3% and 3.4% reduction in per person per year spending in years one, two and three, respectively, which was $208, $138 and $107.  Not much really, but every little bit helps, maybe, and this was an estimate across all enrolled persons, in all kinds of plan.  The reductions were concentrated, however, in the high-deductible plan members, who saw 9% to 13% spending declines.  The spending reductions were all in prescription drug and outpatient spending.  Inpatient and emergency room use was unchanged.  This is consistent with the notion that the latter two categories may not be particularly discretionary.    It appears that there may be some greater effect with an HSA versus an HRA and with the employer making a lesser contribution to an HSA, all of which relate to the stronger financial incentive for the individual regarding their perception of money belonging to them.  The researchers conclude that there is slight evidence to suggest that high-deductible plan incentives decline over time and moderate evidence that they don’t increase.

As the article points out, one concern about consumers’ health decisions under high-deductible plans is whether they understand their benefit designs well.  Some research suggests they don’t know that much preventive is exempt from the deductible.  Ensuring good knowledge could help ensure that consumers don’t skimp on care that is basically free of cost-sharing.  While three years is longer than most studies on high-deductible plans, it isn’t long enough to really understand long-term effects, and this particular study is using old data.  A study to effectively evaluate long-term effects would take a ten years.  And health outcomes need to be evaluated along with spending.

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