High deductible health plans may reduce how much people spend on healthcare in the short term, but they don’t appear to slow the rate at which that spending grows over time, according to a study of more than 324,000 commercially insured members published in the International Journal of Health Economics and Management.
The study, published in May, was led by researchers at the University of Pennsylvania’s Wharton School and included co-authors from Analysis Group, the Elevance Health Public Policy Institute and Georgia State University.
The researchers analyzed claims and enrollment data from Elevance covering more than 53,000 employer groups across 14 states from 2015 to 2018. The final sample included nearly 160,000 members who stayed in HDHPs throughout the study period, more than 164,000 who stayed in low deductible health plans and nearly 13,000 who switched from low to high deductible coverage. All were adults aged 18 to 64 enrolled in fully insured PPO plans. HDHPs were defined as plans with an individual deductible of at least $1,250 or a family deductible of $2,500.
Four notes:
1. Enrollment in HDHPs for four or more years was not associated with lower total healthcare spending growth compared to continued enrollment in low deductible plans. Three-year total spending growth was nearly identical between the two groups, and the difference in medical spending growth was not statistically significant. Pharmacy spending growth was the one exception, coming in significantly lower among HDHP members at $570 versus $694 for the LDHP group.
2. Among members forced to switch from a low deductible plan to an HDHP because their employer eliminated the low deductible option, spending levels dropped in the first year after the switch, and the reduction was marginally significant for total and medical spending. However, spending growth in years two and three after the switch showed no significant difference from the control group of members who remained in low deductible plans with no choice of coverage.
3. While spending levels were roughly 20% lower in the HDHP group relative to the LDHP group throughout the study period, spending in both groups grew at a similar pace. The authors attributed the pattern to new medical technologies having higher marginal health value than established care, making demand for those technologies less sensitive to cost-sharing. In other words, higher deductibles may discourage spending on existing services but do not appear to slow the adoption of newer, costlier treatments that drive spending growth over time.
4. The authors noted several limitations, including that the data came from a single insurer and didn’t include plans offered by other carriers at the same employers. The study also lacks detailed employer characteristics such as industry sector or firm size, and the researchers acknowledged that effects measured at the individual plan level may understate the impact of market-wide shifts in cost-sharing. They also noted that selective attrition, where lower-spending members leave HDHPs and higher-spending members leave LDHPs, could reduce the estimated differences in spending growth between the two groups.
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