NCPA - National Center for Policy Analysis


January 12, 2007

Early critics of consumer-directed health care (CDHC) worried adverse selection of young, healthy workers would destroy traditional risk pools.  Yet there is no evidence that CDHC attracts disproportionate numbers of young people, says John Goodman, president of the National Center for Policy Analysis. 

When adjusted for retirees who were not eligible, a recent Government Accountability Office (GAO) report of government workers found those joining CDHC plans were about the same age as enrolling in more traditional plans.  Two additional GAO reports came to similar conclusions.  A recent survey by the health insurance industry trade group found adult enrollees evenly distributed with nearly one-quarter between the age of 40 and 49 and one quarter above that age group and one-quarter below.

Assurant Health (formerly Fortis) reported on its enrollees with health savings accounts in 2005.  It found:

  • Nearly one-third (30 percent) had less than $50,000 annually in family income.
  • About 44 percent had previously been uninsured shortly before obtaining an HSA.
  • More than half (61 percent) were older than age 40.
  • More than two-thirds (69 percent) were families with children.

A study in the Annuals of Internal Medicine found enrollee satisfactions is not related to quality.  In fact, this phenomenon is not uncommon among consumer goods.  Satisfaction is generally more closely related to good communication and met expectations, says Goodman. 

Moreover, surveys where enrollees rate their CDHP lower than managed care may be sampling unrepresentative enrollees or people who perceived they've lost benefits when switched to a full-replacement CDHC plan.  Or it may point to the need to have better consumer education and about the merits and uses of the plans in addition to greater price transparency, says Goodman.

Source: John C. Goodman, "Statement on Consumer Driven Health Care: Testimony Before the Senate Health, Education, Labor and Pensions Committee," National Center for Policy Analysis, January 10, 2007; and "Who's Taking Advantage of Health Savings Accounts (HSAs)? Who's Taking Advantage of Health Savings Accounts (HSAs)?" Assurant Health, 2006. 

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