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The Effects of Consumer-Directed Health Plans on Episodes of Health Care

Author

Listed:
  • Haviland Amelia M.

    (RAND Corporation)

  • Sood Neeraj

    (University of Southern California)

  • McDevitt Roland D.

    (Towers Watson)

  • Marquis M. Susan

    (RAND Corporation)

Abstract

Past research has shown that high deductible and consumer-directed health plans (HD/CDHPs) can significantly reduce health care costs. In this paper we investigate how these cost savings are realized. We use panel data from many large employers and difference in difference models to examine how HD/CDHPs affect the number of health care episodes and the cost per episode. Our results show that about two-thirds of the cost savings from HD/CDHP enrollment are from reductions in number of episodes and the remaining one-third of the savings are from reductions in costs per episode. The presence of a Health Reimbursement Arrangement (HRA) or Health Savings Account (HSA) does not temper the effects of high deductibles on number of episodes. However, enrollees in plans with generous employer contributions to HSAs have more episodes of care than enrollees in plans where employers make smaller account contributions. The reductions in costs per episode and in visits to specialists, inpatient care, and use of non-generic pharmaceuticals suggest that higher deductibles are effective at making patients more cost conscious even after care is initiated.

Suggested Citation

  • Haviland Amelia M. & Sood Neeraj & McDevitt Roland D. & Marquis M. Susan, 2011. "The Effects of Consumer-Directed Health Plans on Episodes of Health Care," Forum for Health Economics & Policy, De Gruyter, vol. 14(2), pages 1-28, September.
    • Handle: RePEc:bpj:fhecpo:v:14:y:2011:i:2:n:9
    DOI: 10.2202/1558-9544.1258
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    Cited by:

    1. Ethan M. J. Lieber, 2017. "Does It Pay to Know Prices in Health Care?," American Economic Journal: Economic Policy, American Economic Association, vol. 9(1), pages 154-179, February.
    2. Sood Neeraj & Wagner Zachary & Huckfeldt Peter & Haviland Amelia M., 2013. "Price Shopping in Consumer-Directed Health Plans," Forum for Health Economics & Policy, De Gruyter, vol. 16(1), pages 1-19, March.

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