What Do We Know About High Deductible Health Plans

Transcription

1 What Do We Know About High Deductible Health Plans Neeraj Sood Vice Dean for Research, USC Price School of Public Policy Director of Research, USC Schaeffer Center for Health Policy & Economics October

2 Acknowledgements Co-authors Matthew Eisenberg (Johns Hopkins) Amelia Haviland (Carnegie Mellon) Peter Huckfeldt (University of Minnesota) Ateev Mehrotra (Harvard) Rachel Reid (RAND) Anna Sinaiko (Harvard) Zach Wagnar (Stanford) Xinke Zhang (University of Southern California) 2

3 Acknowledgements Funding National Institute of Aging (NIA) and the NIH Common Fund for Health Economics ( grant number 5R01AG043850) NIHCM Foundation grant California Health Care Foundation grant 3

4 What are High Deductible Health Plans (HDHPs)? Health insurance plans with a deductible of at least $1,250 for individual coverage and $2,500 for family coverage Often associated tax free health savings account These are called Consumer Directed Health Plans Implications for out of pocket costs Consumers have to pay more out of pocket for health care before insurance begins covering costs Lower premiums Attractive for healthy consumers who have low expected health care use 4

5 HDHPs are Becoming Increasingly Popular % of employees had HDHPs % of employees have HDHPs Source: Kaiser/HRET Survey of Employer Sponsored Health Benefits 5

6 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

7 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

8 HDHPs Reduce Health Care Costs Short and Long Run Cost Decrease High Deductible vs Traditional Plan 0% -5% -10% -8.50% -15% % -20% -25% -22% Year 1 Year 2 Year 3 Source: Haviland et. al., Do CDHPs Bend the Cost Curve Over Time? 8

9 HDHPs Reduce Health Care Costs Short and Long Run Cost Decrease High Deductible vs Traditional Plan 0% -5% -10% -8.50% -15% % Savings driven by reductions in outpatient and drug spending -20% -25% -22% Year 1 Year 2 Year 3 Little or no effect on ER or inpatient spending Source: Haviland et. al., Do CDHPs Bend the Cost Curve Over Time? 9

10 HDHPs Encourage Favorable Selection HDHPs experience favorable selection: 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 10

11 HDHPs Increase Excessive Financial Burden of Out-of-Pocket Costs 60 Percent of Enrollees Having Excessive Financial Burden (OOP > 3% of income) Pre-year 2 Pre-year 1 Post-year 1 Post-year 2 Traditional Plan CDHP 11

12 HDHPs Increase Excessive Financial Burden of Out-of-Pocket Costs 60 Percent of Enrollees Having Excessive Financial Burden (OOP > 3% of income) But HDHPs are cheaper. Average employee premiums in 2013 $726 for CDHPs with an HSA, $1,027 for non-cdhp plans Pre-year 2 Pre-year 1 Post-year 1 Post-year 2 Traditional Plan CDHP 12

13 Low-Income Population is Hit Harder 60 Percent of Enrollees Having Excessive Financial Burden (OOP > 3% of income) Pre-year 2 Pre-year 1 Post-year 1 Post-year 2 Traditional Plan CDHP 13

14 Those with Chronic Conditions are Hit Harder 60 Percent of Enrollees Having Excessive Financial Burden (OOP > 3% of income) Pre-year 2 Pre-year 1 Post-year 1 Post-year 2 Traditional Plan CDHP 14

15 Are Cost Savings Achieved by Smarter or Value Based Decisions? Costs = Price x Quantity Smarter quantity choices: Reduce use of low value care Increase use of high value care Smarter price choices: User lower priced providers User lower priced services 15

16 Do HDHPs Lead to Smarter Quantity Choices? 16

17 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 17

18 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 18

19 Those Offered HDHPs had Similar Screening Rates Prior to HDHP Offer 25

20 Screening Rate Increased in Anticipation of HDHP Offer and Enrollment 26

21 HDHP Offer and Enrollment had No Effect on Cancer Screening Rates 27

22 HDHP Offer and Enrollment had No Effect on Cancer Screening Rates Results similar for: Those with high versus low use of physicians Older versus younger beneficiaries 28

23 How are Cost Savings Achieved? Drugs for chronic illness is a good case study: Perceived as high value care Repeat purchase and non-trivial cost Lower cost alternatives available 29

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 Antihypertensives 30

25 Purchases Spike for CDHP Firm in Late

26 Purchases Dip for CDHP Firm in Early

27 Pattern Suggests Stocking or Timing Response 34

28 Days Used Suggests Reduced Utilization 35

29 Use of Lower Cost Drugs Increases 36

30 Relative Magnitude of Response Margins 37

31 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 38

32 HDHPs Enrollment has Little or No Effect on Low-Value Care Enrollment in HDHPs reduced outpatient spending by $231 (CI: ) Enrollment in HDHPs had no statistically significant effect on low-value spending Point estimate was reduction low value spending of $3.64 (CI: ) 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: ) 39

33 Do HDHPs Lead to Smarter Price Choices? 40

34 Health Care Prices Vary Significantly, Even Within the Same Market Laboratory Tests 5.9 Imaging 2.7 Office Visits Ratio of 95th to 5th Percentile Source: Whaley, C., Chafen, J. S., Pinkard, S., Kellerman, G., Bravata, D., Kocher, R., & Sood, N. (2014). Association between availability of health service prices and payments for these services. Jama, 312(16),

35 Little Correlation Between Cost and Quality There is no correlation between what people pay and quality of health care they get. Bill Clinton Found inconsistent evidence on both the direction and the magnitude of the association between health care costs and quality, Peter Hussey lead author of systematic review in Annals of Internal Medicine 42

36 Higher Price Providers Control Large Share of Market Source: Massachusetts Health Care Cost Trends Price Variation in Health Care Services. Boston, MA: Massachusetts Division of Health Care Finance and Policy;

37 Why Price Shopping Makes Sense Large variation in price Little correlation between price and quality of care Higher priced providers control large share of the market 44

38 High Deductible Health Plans Don t Encourage Price Shopping Price-shopping behavior and perceptions from a national survey Compared prices Consider another health provider Higher Price Means Higher Quality Prices Vary Trad. Plan High Deductible Plan Source: Sinaiko, A. D., Mehrotra, A., & Sood, N. (2016). Cost-sharing obligations, high-deductible health plan growth, and shopping for health care: enrollees with skin in the game. JAMA internal medicine, 176(3),

39 Conclusions Pros Several large employers offer HDHPs Evidence that HDHPs lower health care costs Little or no evidence of increase in ER or inpatient costs Little or no evidence of decline in use of preventive care Cons Modest increase in premiums for traditional plans due to favorable selection Financial burden for low-income and chronically ill Reduction in use of medications for chronic illness Little or no evidence of decline in use of low-value care Little or no evidence of increase in price-shopping 46

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