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Do “Consumer-Directed” health plans bend the cost curve over time?


  • Haviland, Amelia M.
  • Eisenberg, Matthew D.
  • Mehrotra, Ateev
  • Huckfeldt, Peter J.
  • Sood, Neeraj


“Consumer-Directed” Health Plans (CDHPs), those with high deductibles and personal medical accounts, are intended to reduce health care spending through greater patient cost exposure. Prior research agrees that in the first year, CDHPs reduce spending. There is little research and in it results are mixed regarding the impact of CDHPs over the longer term. We add to this literature with an intent-to-treat, difference-in-differences analysis of health care spending over up to three years post CDHP offer among 13 million person-years of data from 54 large US firms, half of which offered CDHPs. To strengthen the identification, we balance observables over time within firm, by developing weights through a machine learning algorithm, generalized boosted regression. We find that spending is reduced for those in firms offering CDHPs in all three years post offer relative to firms continuing to offer lower-deductible plans. The reductions are driven by spending decreases in outpatient care and pharmaceuticals, with no evidence of increases in emergency department or inpatient care over the three-year window.

Suggested Citation

  • Haviland, Amelia M. & Eisenberg, Matthew D. & Mehrotra, Ateev & Huckfeldt, Peter J. & Sood, Neeraj, 2016. "Do “Consumer-Directed” health plans bend the cost curve over time?," Journal of Health Economics, Elsevier, vol. 46(C), pages 33-51.
  • Handle: RePEc:eee:jhecon:v:46:y:2016:i:c:p:33-51
    DOI: 10.1016/j.jhealeco.2016.01.001

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    References listed on IDEAS

    1. Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-277, June.
    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.
    3. Amy Finkelstein & Sarah Taubman & Bill Wright & Mira Bernstein & Jonathan Gruber & Joseph P. Newhouse & Heidi Allen & Katherine Baicker, 2012. "The Oregon Health Insurance Experiment: Evidence from the First Year," The Quarterly Journal of Economics, Oxford University Press, vol. 127(3), pages 1057-1106.
    4. Haviland Amelia M & Sood Neeraj & McDevitt Roland & Marquis M Susan, 2011. "How Do Consumer-Directed Health Plans Affect Vulnerable Populations?," Forum for Health Economics & Policy, De Gruyter, vol. 14(2), pages 1-25, April.
    5. Anthony T. Lo Sasso & Lorens A. Helmchen & Robert Kaestner, 2010. "The Effects of Consumer‐Directed Health Plans on Health Care Spending," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 77(1), pages 85-103, March.
    6. Amitabh Chandra & Jonathan Gruber & Robin McKnight, 2010. "Patient Cost-Sharing and Hospitalization Offsets in the Elderly," American Economic Review, American Economic Association, vol. 100(1), pages 193-213, March.
    7. Peter J. Huckfeldt & Amelia Haviland & Ateev Mehrotra & Zachary Wagner & Neeraj Sood, 2015. "Patient Responses to Incentives in Consumer-directed Health Plans: Evidence from Pharmaceuticals," NBER Working Papers 20927, National Bureau of Economic Research, Inc.
    8. Bijan J. Borah & Marguerite E. Burns & Nilay D. Shah, 2011. "Assessing the impact of high deductible health plans on health‐care utilization and cost: a changes‐in‐changes approach," Health Economics, John Wiley & Sons, Ltd., vol. 20(9), pages 1025-1042, September.
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    Blog mentions

    As found by, the blog aggregator for Economics research:
    1. Thesis Thursday: Sarah Zheng
      by Chris Sampson in The Academic Health Economists' Blog on 2018-03-15 07:00:19


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    Cited by:

    1. Zarek C. Brot-Goldberg & Amitabh Chandra & Benjamin R. Handel & Jonathan T. Kolstad, 2017. "What does a Deductible Do? The Impact of Cost-Sharing on Health Care Prices, Quantities, and Spending Dynamics," The Quarterly Journal of Economics, Oxford University Press, vol. 132(3), pages 1261-1318.
    2. Eisenberg, Matthew D. & Haviland, Amelia M. & Mehrotra, Ateev & Huckfeldt, Peter J. & Sood, Neeraj, 2017. "The long term effects of “Consumer-Directed” health plans on preventive care use," Journal of Health Economics, Elsevier, vol. 55(C), pages 61-75.
    3. Jonathan Gruber & Johanna Catherine Maclean & Bill J. Wright & Eric S. Wilkinson & Kevin Volpp, 2016. "The Impact of Increased Cost-sharing on Utilization of Low Value Services: Evidence from the State of Oregon," NBER Working Papers 22875, National Bureau of Economic Research, Inc.
    4. Stefan Pichler & Jan Ruffner, 2016. "Does it really make a difference? Health care utilization with two high deductible health care plans," KOF Working papers 16-404, KOF Swiss Economic Institute, ETH Zurich.
    5. Whaley, Christopher M. & Brown, Timothy T., 2018. "Firm responses to targeted consumer incentives: Evidence from reference pricing for surgical services," Journal of Health Economics, Elsevier, vol. 61(C), pages 111-133.
    6. Chenyuan Liu & Justin R. Sydnor, 2018. "Dominated Options in Health-Insurance Plans," NBER Working Papers 24392, National Bureau of Economic Research, Inc.
    7. Christopher Whaley & Timothy Brown & James Robinson, 2019. "Consumer Responses to Price Transparency Alone versus Price Transparency Combined with Reference Pricing," American Journal of Health Economics, MIT Press, vol. 5(2), pages 227-249, Spring.
    8. Molly Frean & Mark Pauly, 2018. "Does High Cost-Sharing Slow the Long-term Growth Rate of Health Spending? Evidence from the States," NBER Working Papers 25156, National Bureau of Economic Research, Inc.

    More about this item


    High deductible health plans; Health care cost trends;

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private


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