Consumer Driven Health Care Plans

For about the last 10 years the United States has been experimenting with consumer driven health care plans.  CDH plans typically combine a high-deductible insurance policy with a health savings account or health reimbursement account.  CDH plans now cover well over 8 million individuals, up considerably from 4.5 million in 2007 and these types of plans continue to grow rapidly.  So what have been the results?

The American Academy of Actuaries has recently produced a review of high quality research on these plans.  Here are their conclusions:

The primary indications are that properly designed CDH plans can produce significant (even substantial) savings without adversely affecting member health status.  To the knowledge of the work group, no data-based study has emerged that presents a contrary view.

Cost-savings in the first year of instituting a CDH plan relative to a traditional plan ranged from 12% to 21%, remarkably large figures.  Moreover, costs appear to grow more slowly under CDH plans than under traditional plans.  

The knock on CDH plans has always been that they could cause people to avoid preventative case.  Not only does this appear to be false it’s the opposite of the truth:

Generally, all of the studies indicated that cost savings did not result from avoidance of inappropriate care and that necessary care was received in equal or greater degree relative to traditional plans.  All of the studies reported a signficant increase in preventative services for CDH participants.

Especially interesting is that some of the studies found that CDH plans resulted in better compliance with evidence-based care.

Note that these results come from CDH plans instituted within the current system.  One would expect that the general equilibrium effects of consumer driven health plans would be even larger than the partial equilibrium effects, see Singapore for evidence (but consider Tyler’s remarks). 

The American Academy of Actuaries is a credible organization but I would like to see more of the underlying data.  All of the studies the AAA reviewed used credible methodologies, controlled for selection and were based on substantial data but the major studies so far have been industry funded.

It’s remarkable that in the current debate over how to control health care costs so little attention is being given to the important results of our 10-year experiment with consumer driven health plans.


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