Consumer-directed health plans shown to be money-savers

However, researchers say a small part of that savings was patients electing not to pay for some preventive services.

By — Posted May 21, 2012

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Under the ideal of consumer-directed health care, patients are supposed to save money on premiums and shop for the best care at the lowest price.

A large study of the medical spending patterns of consumer-directed health plan enrollees, published in the May Health Affairs, found that CDHP enrollees did indeed spend less on care, saving them and their employers money. But the declines were not restricted to unnecessary and redundant tests. The drop also was due to fewer preventive tests and screenings.

“Enrollment in consumer-directed health plans probably will grow in the coming years, motivating enrollees to cut back on spending and producing savings for employees, employers and the nation as a whole,” the study said. “But we need better information to help enrollees and their health care providers identify high-value care, and we need more refined plan designs and decision support systems to promote the use of such care.”

The researchers, who were affiliated with the RAND Corp. and the consulting firm Towers Watson, found that if enrollment in consumer-directed health plans were to reach 50% of the insured, annual health care spending in the U.S. could be reduced by as much as $57 billion. The estimate is based on an analysis of enrollees in consumer-directed plans from 2003 to 2007, compared with government estimates of per-person health care spending by adults younger than 65.

As of 2010, an estimated 12.6% of people with employer-sponsored health coverage were enrolled in consumer-directed plans, according to the RAND study. But enrollment has grown rapidly in the last five years, so there is a realistic chance that consumer-directed plans eventually will make up the majority of employer-sponsored health plans, according to RAND. That growth is expected to happen with or without the Patient Protection and Affordable Care Act in effect.

The findings leave open the same questions that have dogged consumer-directed care from the outset: Will high deductibles promote only short-term savings? And will patients’ health get worse in the long run because they have scrimped on prevention?

For physicians, even more questions remain unanswered: How can they best care for patients and keep their practices financially viable if their patients are avoiding treatment? Will patients keep skipping needed tests and medical office visits along with unneeded ones?

Consumer-directed boom

The growth in adoption of consumer-directed plans has been attributed to sharp increases in the price of lower-deductible plans and an interest by many employers in getting their workers to shop for the best, least expensive care. The most recent survey by the Kaiser Family Foundation and the Health Research and Educational Trust found that 17% of workers who received health insurance through their employers were enrolled in high-deductible plans and paired health savings accounts or health reimbursement arrangements, up from 4% in 2006.

But that growth has come without an accompanying boom in the volume and quality of information available to patients about what care costs and where to find the best treatment, said Amelia Haviland, PhD, a RAND-affiliated economist and professor of statistics and health policy at Carnegie Mellon University in Pittsburgh, who co-wrote the study.

The results of the most recent study suggest that patients still don’t have the tools to take charge of their care, so they could use physicians’ help.

“All the control of what care to cut is in the hands of patients,” she said. “There’s nothing about the design of these health plans that engages medical professionals in helping patients making decisions.”

Earlier studies have shown that enrollees in consumer-directed plans consume less health care, even preventive care that is covered without any out-of-pocket costs. The most recent RAND study found that enrollees in consumer-directed plans received 4.7% fewer cervical cancer screenings, 4.2% fewer lipid profiles, 3.7% fewer hemoglobin A1c tests, 2.8% fewer mammograms and 2.8% fewer colorectal cancer screenings.

“They are modest decreases, but they’re in the wrong direction,” Haviland said. “All the economists say we should not be seeing this, because there is first-dollar coverage for most preventive care.”

Under the health reform law, a long list of preventive services must be paid for at no out-of-pocket cost to the patient. But Haviland said few people are aware of the provision, and those who are may worry about getting a hefty bill if a problem is detected during a visit.

In reality, she said, patients don’t understand their coverage and have very few tools to help them compare cost and clinical quality.

“There is a big informational burden these plans place on people,” Haviland said. “Getting in a plan is only the beginning. People need to be engaged with their doctors, employers need to be engaged with their employees, and doctors need to be engaged with patients.”

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The rapid growth of consumer-directed plans

Enrollment in consumer-directed health plans, usually defined as high-deductible coverage paired with either health savings accounts or health reimbursement arrangements, has grown rapidly compared with other forms of insurance.

Enrollees in employer-sponsored coverage
Type of plan 2006 2007 2008 2009 2010 2011
Conventional 3% 3% 1% 1% 1% 1%
HMO 20% 21% 20% 20% 19% 17%
PPO 60% 57% 58% 60% 58% 55%
Point-of-service plan 13% 13% 12% 10% 8% 10%
HDHP/savings option 4% 5% 8% 8% 13% 17%

Source: Kaiser Family Foundation/HRET Survey of Employer-Sponsored Health Benefits, 2011 (link)

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External links

“Growth Of Consumer-Directed Health Plans To One-Half Of All Employer-Sponsored Insurance Could Save $57 Billion Annually,” Health Affairs, May (link)

Kaiser Family Foundation/HRET Survey of Employer-Sponsored Health Benefits, 2011 (link)

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