Consumer-directed health plans show mixed results: Study

Plans gaining popularity with U.S. employers
By David Morgan
|hrreporter.com|Last Updated: 05/08/2012

WASHINGTON (Reuters) — Employer-sponsored health insurance plans with low premiums and high deductibles could cut health-care costs significantly but not without potential risks for workers, according to a recent study.

Consumer-directed health plans would cut health-care costs for the non-elderly by four per cent, or US$57 billion per year, if they accounted for one-half of all employer-sponsored health insurance in the United States, found the Rand study, published in the May issue of the journal Health Affairs.

The plans, which now represent 13 per cent of employer coverage, are championed by some reform advocates including Republicans because their market-oriented approach exposes consumers more directly to health-care costs than do traditional insurance coverage.

The plans typically have annual deductibles of at least US$1,000 per person and are coupled either with tax-exempt health reimbursement arrangements or health savings accounts.

The approach has gained popularity with employers over the past decade, as a way to insulate businesses from health-care cost increases that have long outstripped economic growth and inflation.

The cost-controlling objectives of President Barack Obama's health-care reform law could expand the use of consumer-directed plans in future years, researchers said.

"Continued pressures to cut costs, combined with incentives in the Affordable Care Act, make the 50 per cent enrolment level plausible over the coming decade," said statistician Amelia Haviland of Carnegie Mellon University, who led the Rand study.

Cost savings for the non-elderly population would range from one per cent to two per cent if consumer-directed plans represent 25 per cent of employer coverage, and from five per cent to nine per cent at a 75 per cent market penetration, the study found.

But financial savings could be accompanied by serious problems. "

We need to carefully examine whether additional up-front patient costs will diminish the quality of health care... including poorer health and health emergencies down the road," Haviland said.

The study, which examined insurance claims among 59 large employers from 2003 to 2007, found that families enrolled in consumer-directed plans had fewer encounters with health-care providers and spent less when encounters did occur.

Families used fewer brand-name drugs, paid fewer visits to specialists and had fewer elective hospital admissions than those with traditional insurance.

Researchers warned that some of choices eliminated highly recommended services including cancer screenings and routine blood sugar tests for diabetes patients.

The spread of consumer-directed plans could also mean higher premiums for people with traditional insurance, given evidence that healthier patients tend to drop traditional plans in favour of less costly insurance with high deductibles.

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