Health Plans Neeraj Sood June 2017 Acknowledgements Co-authors - - PowerPoint PPT Presentation

High Deductible Health Plans

Neeraj Sood June 2017

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Acknowledgements

• Co-authors

– Matthew Eisenberg (Johns Hopkins) – Amelia Haviland (Carnegie Mellon) – Peter Huckfeldt (University of Minnesota) – Ateev Mehrotra (Harvard) – Rachel Reid (RAND) – Erin Trish (University of Southern California) – Zach Wagner (University of California Berkeley) – Xinke Zhang (University of Southern California)

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Acknowledgements

• Funding

– National Institute of Aging (NIA) and the NIH Common

Fund for Health Economics (grant number 5R01AG043850)

– NIHCM foundation grant

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The Debate About HDHPs

• Pros:

– Provide an “affordable” option for health insurance

coverage

– Reduce health care costs – Encourage consumers to make smarter or value

based decisions

• Cons:

– Cost shifting and financial burden on consumers – Might lead to adverse selection in low deductible plans – Reduce use of high value services – Health care costs might increase in the long run

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Effects of HDHPs on Health Care Costs

• Data:

– 54 large employers some offer HDHPs – 5 years of claim and enrollment data

• Methods:

– Intent to treat analysis: what is the effect of HDHP offer – Combine this with information on HDHP penetration to

• btain the effect of HDHP enrollment

– Difference in difference analysis

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HDHPs reduce health care costs

• 22%
• 13.50%
• 8.50%
• 25%
• 20%
• 15%
• 10%
• 5%

0%

Year 1 Year 2 Year 3

Short and Long Run Cost Decrease High Deductible vs Traditional Plan

Source: Haviland et. al., 2015. “Do CDHPs Bend the Cost Curve Over Time?”

• Savings driven by

reductions in outpatient and drug spending

• Little or no effect on ER
• r inpatient spending

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HDHPs encourage favorable selection

• HDHPs experience favorable selection:

– Using data from 16 large employers we found that

HDHP enrollees expected health care costs were about 25% lower than traditional plan enrollees (McDevitt et al. 2013)

– 20% HDHP enrollment will increase premiums of

traditional plan by 5%

• Favorable selection can be reduced by:

– Employer contributions to HSAs – Higher employee premium savings from HDHP

enrollment

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HDHPs increase financial burden

• f out of pocket costs

0.0% 20.0% 40.0% 60.0% Pre 2 years Pre 1 year Post 1 year Post 2 years

Percentage of Enrollees Having Excessive Financial Burden Years Before and After CDHP Enrollment

• A. Entire Population

CDHP Group Traditional Plan Group 30.9% 32.9% 47.7% 51.8% 30.3% 31.1% 32.4% 32.9% 0.0% 20.0% 40.0% 60.0% Pre 2 years Pre 1 year Post 1 year Post 2 years

Percentage of Enrollees Having Excessive Financial Burden Years Before and After CDHP Enrollment

• B. Lower-Income Population

CDHP Group Traditional Plan Group 24.2% 25.3% 33.9% 36.8% 22.8% 22.2% 22.0% 22.5% 0.0% 20.0% 40.0% 60.0% Pre 2 years Pre 1 year Post 1 year Post 2 years

Percentage of Enrollees Having Excessive Financial Burden Years Before and After CDHP Enrollment

• C. Population with Chronic Conditions

CDHP Group Traditional Plan Group

Worker contribution to premiums in 2013:

• $1,058 for CDHPs with an HRA,
• $726 for CDHPs with an HSA,
• $1,027 for non-CDHP plans

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Are cost savings achieved by smarter or value-based decision?

• Costs = Price x Quantity
• Smarter quantity choices:

– Reduce use of low value care – Increase use of high value care

• Smarter price choices:

– Price shop for care – User lower priced providers – User lower priced services

• I will focus on quantity and Ateev will focus on price

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How are cost savings achieved?

• Preventive care is:

– perceived as “high value” care – carved out of the deductible (HDHPs have little or no

cost-sharing for preventive care)

• We answer: What is the impact of HDHPs on use of

preventive care?

– Focus on cancer screening for 3 types of cancer:

breast, colon, and cervical

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Theory: Effects of CDHPs on use of preventive care are a priori ambiguous

• CDHPs increase use of preventive care:

– Lower out-of-pocket costs for preventive care – Greater financial incentive to avoid costly medical

condition and thus greater incentive to spend on prevention

• CDHPs decrease use of preventive care:

– Higher out-of-pocket costs for physicians thus less

chance to get referral for preventive care

– Patients might be unaware of carve-out for preventive

care and thus might erroneously perceive the out-of- pocket costs to be higher

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Findings from prior studies are mixed

• Several papers find no difference in screening rates

– Rowe et al. 2008 – Wharam et al. 2008 – Wharam et al. 2012 – Fronstin et al. 2013 – decrease in year 1 and no effects

after year 2

• Several papers find a decrease in cancer screenings

– Buntin et al. 2011 – Haviland et al. 2011 – Charlton 2011 – Wharam et al. 2011 – Brott-Goldberg et al. 2017

• No papers find an increase in cancer screenings

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Our contribution

• Data from 37 large employers
• Evaluate outcomes up to 3 years after CDHP enrollment
• Intent to treat analysis: what is the effect of HDHP offer

– Combine this with information on HDHP penetration to

• btain the effect of HDHP enrollment
• Account for anticipatory effects
• Explore possible reasons for the findings

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Those offered HDHPs had similar screening rates prior to HDHP offer

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Screening rate increased in anticipation of HDHP offer and enrollment

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HDHP offer and enrollment had no effect on cancer screening rates

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HDHP offer and enrollment had no effect on cancer screening rates

Results do not change by:

• Level of deductible
• Predicted number of office visits

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How are cost savings achieved?

• Drugs for chronic illness is a good case study:

– Perceived as “high value” care – Repeat purchase and non-trivial cost – Lower cost alternatives available

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HDHPs and Drug Utilization

• Enrollment in HDHPs can influence utilization along

three dimensions

– Stocking drugs when out-of-pocket prices are low – Switching to generics or lower priced drugs – Reducing utilization (not a good idea for drugs that

are cost-effective)

• We analyze response along these three margins for

3 drug classes:

– Diabetes – Statins – Anti-hypertensives

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Approach: Firm Level Diff in Diff

• Treatment group: firm shifting to CDHP in 2005
• Control group: 19 other large firms only offering

traditional health insurance plans during sample period

• Compare changes after CDHP in treatment group

from 2004 to 2005 and 2007, relative to control group

• Focus on continuously enrolled employees using

specified drug classes in 2005

• Controls for general time trends and time-invariant

firm characteristics.

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Purchases spike for CDHP firm in late 2004

Source: Huckfeldt et. al., 2015. “Patient Responses to Incentives in Consumer-Directed Health Plans: Evidence from Pharmaceuticals.”

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Purchases dip for CDHP firm in early 2005

Source: Huckfeldt et. al., 2015. “Patient Responses to Incentives in Consumer-Directed Health Plans: Evidence from Pharmaceuticals.”

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Pattern suggests stocking or timing response

Source: Huckfeldt et. al., 2015. “Patient Responses to Incentives in Consumer-Directed Health Plans: Evidence from Pharmaceuticals.”

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Days used suggests reduced utilization

Source: Huckfeldt et. al., 2015. “Patient Responses to Incentives in Consumer-Directed Health Plans: Evidence from Pharmaceuticals.”

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Use of lower cost drugs increases

Source: Huckfeldt et. al., 2015. “Patient Responses to Incentives in Consumer-Directed Health Plans: Evidence from Pharmaceuticals.”

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Relative magnitude of response margins

Source: Huckfeldt et. al., 2015. “Patient Responses to Incentives in Consumer-Directed Health Plans: Evidence from Pharmaceuticals.”

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How are cost savings achieved?

• Do HDHPs reduce use of “low-value” services?
• Used data from a large commercial insurer
• Difference-in-Difference analysis with exact matching
• Analyzed use of 26 outpatient low-value services based
• n Choosing Wisely and literature:

– triiodothyronine measurement in hypothyroidism – imaging for nonspecific low back pain – imaging for uncomplicated headache – spinal injection for lower-back pain

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HDHPs enrollment has little or no effect on low-value care

• Enrollment in HDHPs reduced outpatient spending

by $231 (CI: 342 – 122)

• Enrollment in HDHPs had no statistically significant

effect on low-value spending

– Point estimate was reduction low value spending

• f $3.64 (CI: -9.6 – 2.31)
• Enrollment in HDHPs had no statistically significant

effect on low-value spending per $10,000 in out patient spending

– Point estimate was reduction in spending of $7.86

per $10,000 of spending (CI: -18.4 – 2.72)

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HDHPs enrollment has little or no effect on low-value care

• Enrollment in HDHPs reduced outpatient spending

by $231 (CI: 342 – 122)

• Enrollment in HDHPs had no statistically significant

effect on low-value spending

– Point estimate was reduction low value spending

• f $3.64 (CI: -9.6 – 2.31)
• Enrollment in HDHPs had no statistically significant

effect on low-value spending per $10,000 in out patient spending

– Point estimate was reduction in spending of $7.86

per $10,000 of spending (CI: -18.4 – 2.72)

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Conclusions…

• Pros

– Several large employers offer HDHPs – Evidence that HDHPs lower health care costs – Little or no evidence of increase in ER or inpatient costs – Little or no evidence of decline in use of preventive care

• Cons

– Modest increase in premiums for traditional plans due to

favorable selection

– Financial burden for low-income and chronically ill – Reduction in use of medications for chronic illness – Little or no evidence of decline in use of low-value care