Today’s Managing Health Care Costs Number is $100 million
It’s not easy to measure the “true” cost savings from a high deductible health plan. Problems in assessing the actual impact of HDHPs include:
1) Members know that they are moving into an HDHP 3 or 4 months in advance, and so they “stockpile” medical care (whether it is prescription refills or hernia repairs or skin examinations). This care is advanced into the previous year, making year one of the HDHP less expensive, and increasing the delta between that year and the baseline year.
2) If members have a choice, there is a huge positive selection bias into HDHPs – those with more serious medical issues simply remain in the legacy conventional (richer) plan. Some researchers have done risk adjustment, although this is imperfect.
3) Some members with more serious illnesses might leave the employer’s plan altogether, and instead use a spouse’s plan if his or her employer retains a lower deductible option
4) About half of beneficiaries have <$800 in cost each year. For those members, it’s possible that many expenses will simply not be “run through” the health plan, since the member knows that she will be liable for 100% of the cost anyway.
Zarek Brot-Goldman and colleagues used a unique claims database from a major American employer which converted 50,000 employees (200,000 total covered members) to a full replacement high deductible health plan with a funded health care savings account in 2013. They followed the population for 2 years, during which time overall costs decreased by 12-14% and the company decreased its health care spending by $100 million.
Their conclusions:
We find no evidence of price shopping in the first year post switch. The effect is near zero and looks similar for 2012-2013 (moving from pre- to post-change) as it does for earlier year pairs from 2009-2012. Second, we find no evidence of an increase in price shopping in the second year post-switch; consumers are not learning to shop based on price. Third, we find that essentially all spending reductions from 2012-2013 are achieved through outright quantity reductions whereby consumer receive less medical care. From 2012 to 2013 consumers reduce service quantities by 17.9%. Fourth, there is limited evidence that consumers substitute across types of procedures (substitution leads to a 2.2% spending reduction from 2012-2013). Finally, fifth, we find that these quantity reductions persist in the second-year post switch, as the increase in quantities from 2013- 2014 is only 0.7%, much lower than the pre-period trend in quantity growth
The authors also note that the sickest decreased their utilization the most – even those with serious enough illnesses that they could expect to exhaust the out of pocket maximum, so that their marginal out of pocket cost for additional services approached zero. Members of this health plan lowered their health care consumption even though they had a funded health care savings account they could have used to cover the costs of maintaining their care at past levels.
This study’s finding on price shopping are especially disappointing. The company offered a price transparency tool, but there was no evidence that members sought out lower prices even for especially “shoppable” services such as CT scans or MRIs.
What do we learn from this:
1) The company that introduces a full replacement high deductible health plan will save a lot of money
2) These savings will come from reduction in units of service- and these are widely distributed among the sick and the healthy
3) Quantity reductions hit all types of service – even those like preventive care that are covered without the deductible
4) Funding of a health care savings account doesn’t necessarily mean that there will be less decrease in the units of service
I don't think that this article is likely to make employers retreat from high deductible health plans. The savings to the employer (and employee) are huge, and the company didn’t suffer mass defection when it made this conversion. There is no evidence that employee health was harmed. This company has overall well-paid employees, and the results of this might not be applicable to other populations.
Unit prices drive our health care affordability challenge. If subjecting patients as consumers to large out of pocket differentials doesn’t lead to transfer of volume to lower priced providers, we might need other methods (such as narrow networks) to do this. Tiered networks where the difference in price is obvious from the start might be more effective at leading to volume transfer too.
This shows decrease in volume across a wide range of services
Note that the sickest decrease their utilization the most
