High Deductible Health Plans Neeraj Sood June 2017
Acknowledgements • Co-authors – Matthew Eisenberg (Johns Hopkins) – Amelia Haviland (Carnegie Mellon) – Peter Huckfeldt (University of Minnesota) – Ateev Mehrotra (Harvard) – Rachel Reid (RAND) – Erin Trish (University of Southern California) – Zach Wagner (University of California Berkeley) – Xinke Zhang (University of Southern California) 2
Acknowledgements • Funding – National Institute of Aging (NIA) and the NIH Common Fund for Health Economics (grant number 5R01AG043850) – NIHCM foundation grant 3
The Debate About HDHPs • Pros: – Provide an “affordable” option for health insurance coverage – Reduce health care costs – Encourage consumers to make smarter or value based decisions • Cons: – Cost shifting and financial burden on consumers – Might lead to adverse selection in low deductible plans – Reduce use of high value services – Health care costs might increase in the long run 6
Effects of HDHPs on Health Care Costs • Data: – 54 large employers some offer HDHPs – 5 years of claim and enrollment data • Methods: – Intent to treat analysis: what is the effect of HDHP offer – Combine this with information on HDHP penetration to obtain the effect of HDHP enrollment – Difference in difference analysis 7
HDHPs reduce health care costs Short and Long Run Cost Decrease High Deductible vs Traditional Plan 0% -5% -8.50% -10% • Savings driven by -13.50% -15% reductions in outpatient and drug spending • Little or no effect on ER -20% or inpatient spending -22% -25% Year 1 Year 2 Year 3 Source: Haviland et. al., 2015. “Do CDHPs Bend the Cost Curve Over Time?” 8
HDHPs encourage favorable selection • HDHPs experience favorable selection: – Using data from 16 large employers we found that HDHP enrollees expected health care costs were about 25% lower than traditional plan enrollees (McDevitt et al. 2013) – 20% HDHP enrollment will increase premiums of traditional plan by 5% • Favorable selection can be reduced by: – Employer contributions to HSAs – Higher employee premium savings from HDHP enrollment 9
HDHPs increase financial burden of out of pocket costs A. Entire Population 60.0% Percentage of Enrollees Having Excessive Financial Burden Worker contribution to premiums in 2013: • 40.0% $1,058 for CDHPs with an HRA, • $726 for CDHPs with an HSA, 20.0% • $1,027 for non-CDHP plans 0.0% Pre 2 years Pre 1 year Post 1 year Post 2 years C. Population with Chronic Conditions Years Before and After CDHP Enrollment 60.0% Percentage of Enrollees Having Excessive Financial Burden CDHP Group Traditional Plan Group 36.8% B. Lower-Income Population 40.0% 33.9% 60.0% Percentage of Enrollees Having Excessive 25.3% 24.2% 51.8% 47.7% 20.0% 22.8% 22.2% 22.5% 22.0% Financial Burden 40.0% 32.9% 0.0% 30.9% Pre 2 years Pre 1 year Post 1 year Post 2 years 32.9% 32.4% Years Before and After CDHP Enrollment 31.1% 30.3% 20.0% CDHP Group Traditional Plan Group 0.0% Pre 2 years Pre 1 year Post 1 year Post 2 years Years Before and After CDHP Enrollment CDHP Group Traditional Plan Group 10
Are cost savings achieved by smarter or value-based decision? • Costs = Price x Quantity • Smarter quantity choices: – Reduce use of low value care – Increase use of high value care • Smarter price choices: – Price shop for care – User lower priced providers – User lower priced services • I will focus on quantity and Ateev will focus on price 11
How are cost savings achieved? • Preventive care is: – perceived as “high value” care – carved out of the deductible (HDHPs have little or no cost-sharing for preventive care) • We answer: What is the impact of HDHPs on use of preventive care? – Focus on cancer screening for 3 types of cancer: breast, colon, and cervical 12
Theory: Effects of CDHPs on use of preventive care are a priori ambiguous • CDHPs increase use of preventive care: – Lower out-of-pocket costs for preventive care – Greater financial incentive to avoid costly medical condition and thus greater incentive to spend on prevention • CDHPs decrease use of preventive care: – Higher out-of-pocket costs for physicians thus less chance to get referral for preventive care – Patients might be unaware of carve-out for preventive care and thus might erroneously perceive the out-of- pocket costs to be higher 13
Findings from prior studies are mixed • Several papers find no difference in screening rates – Rowe et al. 2008 – Wharam et al. 2008 – Wharam et al. 2012 – Fronstin et al. 2013 – decrease in year 1 and no effects after year 2 • Several papers find a decrease in cancer screenings – Buntin et al. 2011 – Haviland et al. 2011 – Charlton 2011 – Wharam et al. 2011 – Brott-Goldberg et al. 2017 • No papers find an increase in cancer screenings 14
Our contribution • Data from 37 large employers • Evaluate outcomes up to 3 years after CDHP enrollment • Intent to treat analysis: what is the effect of HDHP offer – Combine this with information on HDHP penetration to obtain the effect of HDHP enrollment • Account for anticipatory effects • Explore possible reasons for the findings 18
Those offered HDHPs had similar screening rates prior to HDHP offer 20
Screening rate increased in anticipation of HDHP offer and enrollment 21
HDHP offer and enrollment had no effect on cancer screening rates 22
HDHP offer and enrollment had no effect on cancer screening rates Results do not change by: • Level of deductible • Predicted number of office visits 23
How are cost savings achieved? • Drugs for chronic illness is a good case study: – P erceived as “high value” care – Repeat purchase and non-trivial cost – Lower cost alternatives available 24
HDHPs and Drug Utilization • Enrollment in HDHPs can influence utilization along three dimensions – Stocking drugs when out-of-pocket prices are low – Switching to generics or lower priced drugs – Reducing utilization (not a good idea for drugs that are cost-effective) • We analyze response along these three margins for 3 drug classes: – Diabetes – Statins – Anti-hypertensives 25
Approach: Firm Level Diff in Diff • Treatment group: firm shifting to CDHP in 2005 • Control group: 19 other large firms only offering traditional health insurance plans during sample period • Compare changes after CDHP in treatment group from 2004 to 2005 and 2007, relative to control group • Focus on continuously enrolled employees using specified drug classes in 2005 • Controls for general time trends and time-invariant firm characteristics. 26
Purchases spike for CDHP firm in late 2004 Source: Huckfeldt et. al., 2015. “Patient Responses to Incentives in Consumer -Directed Health Plans: Evidence from Pharmaceutica ls.” 27
Purchases dip for CDHP firm in early 2005 Source: Huckfeldt et. al., 2015. “Patient Responses to Incentives in Consumer -Directed Health Plans: Evidence from Pharmaceutica ls.” 28
Pattern suggests stocking or timing response Source: Huckfeldt et. al., 2015. “Patient Responses to Incentives in Consumer -Directed Health Plans: Evidence from Pharmaceutica ls.” 29
Days used suggests reduced utilization Source: Huckfeldt et. al., 2015. “Patient Responses to Incentives in Consumer -Directed Health Plans: Evidence from Pharmaceutica ls.” 30
Use of lower cost drugs increases Source: Huckfeldt et. al., 2015. “Patient Responses to Incentives in Consumer -Directed Health Plans: Evidence from Pharmaceutica ls.” 31
Relative magnitude of response margins Source: Huckfeldt et. al., 2015. “Patient Responses to Incentives in Consumer -Directed Health Plans: Evidence from Pharmaceutica ls.” 32
How are cost savings achieved? • Do HDHPs reduce use of “low - value” services? • Used data from a large commercial insurer • Difference-in-Difference analysis with exact matching • Analyzed use of 26 outpatient low-value services based on Choosing Wisely and literature: – triiodothyronine measurement in hypothyroidism – imaging for nonspecific low back pain – imaging for uncomplicated headache – spinal injection for lower-back pain 33
HDHPs enrollment has little or no effect on low-value care • Enrollment in HDHPs reduced outpatient spending by $231 (CI: 342 – 122) • Enrollment in HDHPs had no statistically significant effect on low-value spending – Point estimate was reduction low value spending of $3.64 (CI: -9.6 – 2.31) • Enrollment in HDHPs had no statistically significant effect on low-value spending per $10,000 in out patient spending – Point estimate was reduction in spending of $7.86 per $10,000 of spending (CI: -18.4 – 2.72) 34
HDHPs enrollment has little or no effect on low-value care • Enrollment in HDHPs reduced outpatient spending by $231 (CI: 342 – 122) • Enrollment in HDHPs had no statistically significant effect on low-value spending – Point estimate was reduction low value spending of $3.64 (CI: -9.6 – 2.31) • Enrollment in HDHPs had no statistically significant effect on low-value spending per $10,000 in out patient spending – Point estimate was reduction in spending of $7.86 per $10,000 of spending (CI: -18.4 – 2.72) 35
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