Health care costs are sucking the country dry. One remedy gaining support is consumer-directed health insurance plans, in which individuals accept high deductibles in return for relatively low monthly premiums. Many variants offer health care savings accounts that allow plan holders to store money tax-free to help pay for the increased out-of-pocket medical expenses. Enrollment in such plans expanded from four percent of employer-sponsored enrollment in 2006 to 13 percent in 2010. Big savings could be in the offing if the trend continues, report Carnegie Mellon University public policy and statistics professor Amelia M. Haviland and her coauthors.
Consumer-directed plans could eventually constitute 50 percent of employer-sponsored enrollment, in part because the 2010 Affordable Care Act encourages their growth. Haviland and her colleagues looked at the recent experience of plan users to estimate the effect. What they found will thrill budget hawks: Such a shift would reduce health care spending $57 billion per year. That’s equal to seven percent of all costs for the employer-sponsored population.
Because the insured have more “skin in the game” due to their high deductibles, they are more likely to evaluate their options closely and are less likely to seek out unnecessary care, Haviland and colleagues say. “About two-thirds of the savings would result from fewer episodes of care and about one-third from lower spending per episode,” they note. Prescription drug costs (through greater use of generic drugs), visits to specialists, and rates of hospitalization all dropped in the first year of enrollment of the group they studied. Low-income families and families that had a member with a chronic illness saw their costs decline at a rate comparable to that experienced by middle- and upper-income families of more typical health status.
There are still kinks in the consumer-directed model. When people shift from traditional insurance to the new plans, they reduce their use of preventive care. Among women whose coverage changed to a consumer-directed model, for example, the number who underwent a screening for cervical cancer decreased almost five percent in the first year after the shift.
Some enrollees may have been unaware that most preventive care is fully reimbursed by insurance, as required by the 2010 law. Enrollees in consumer-directed plans will need to be better educated about the health care system, the authors say. And additional research needs to be done on the long-term spending and health outcomes of such plans. But in a field barren of much good news, an option that seems to reduce costs responsibly is welcome indeed.