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Consumer-Directed Health Plans and Health Savings Accounts: Have They Worked for Small Business?


  • Gates Susan M

    () (RAND Corporation)

  • Kapur Kanika

    () (University College Dublin and RAND Corporation)

  • Karaca-Mandic Pinar

    () (University of Minnesota and RAND Corporation)


Cost has deterred many small businesses from providing health insurance to their workers. Consumer-directed health plans, which are potentially less costly than traditional health plans, may be well suited to workers in small businesses. We study the factors that are associated with CDHP offering, determine the variation in CDHP offering among large and small firms, and develop models of persistence in CDHP offering. Our analysis of the Kaiser-HRET survey shows that small firms have been no quicker in their uptake of CDHPs than larger firms, and appear to display somewhat more churning in CDHP offering than large firms. Small firms that employ between three and 49 workers are less likely to offer HRA/HSA plans conditional on offering HD plans than large firms. Furthermore, conditional on offering some health insurance, firms that employ 200 to 499 workers appear to be less likely to offer both HRA/HSA plans and HD plans compared to larger firms. Our results suggest a limited role for the current incarnation of consumer-directed health plans in encouraging small business to provide insurance.

Suggested Citation

  • Gates Susan M & Kapur Kanika & Karaca-Mandic Pinar, 2008. "Consumer-Directed Health Plans and Health Savings Accounts: Have They Worked for Small Business?," Forum for Health Economics & Policy, De Gruyter, vol. 11(2), pages 1-22, April.
  • Handle: RePEc:bpj:fhecpo:v:11:y:2008:i:2:n:4

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    References listed on IDEAS

    1. Zeckhauser, Richard, 1970. "Medical insurance: A case study of the tradeoff between risk spreading and appropriate incentives," Journal of Economic Theory, Elsevier, vol. 2(1), pages 10-26, March.
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    Cited by:

    1. Susan M. Gates & Pinar Karaca-Mandic & James R. Burgdorf & Kanika Kapur, 2009. "Health savings accounts for small businesses and entrepreneurs : shopping, take-Up and implementation challenges," Working Papers 200925, School of Economics, University College Dublin.
    2. C. J. Krizan & Adela Luque & Alice Zawacki, 2014. "The Effect Of Employer Health Insurance Offering On The Growth And Survival Of Small Business Prior To The Affordable Care Act," Working Papers 14-22, Center for Economic Studies, U.S. Census Bureau.

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