NCPA - National Center for Policy Analysis

Do Consumer-Directed Health Plans Bend the Cost Curve Over Time?

August 3, 2015

Consumer-directed health plans (CDHPs), health plans in which high deductibles are paired with tax-advantaged personal medical accounts, are becoming increasingly common. Enrollment in CDHPs in the employer-sponsored market has grown from 4 percent to 20 percent over the last five years. These accounts are intended to reduce health care spending through greater patient cost sharing.

While the theory and empirical evidence regarding the impact of CDHPs on spending in the short term is clear, the longer-term impacts are less certain. A study by NBER researchers found:

  • Total health care spending at companies fell by five percent every year for three years after CDHPs were offered.
  • The long term decreases in spending are focused in outpatient care and drugs and there is little impact on inpatient or emergency department spending.
  • If these effects are due only to changes in health care spending among those enrolled in CDHPs, they imply effects for those enrolled in CDHPs of an approximately 15 percent reduction in total spending.
  • The data suggests that the impact of CDHPs is greater when paired with health savings accounts (versus HRAs) and when employers make smaller account contributions.

These findings do not support either the concern that decreases in spending will be a one-time occurrence or that short-term decreases in spending with a CDHP will result in increases in spending in the long term due to complications of forgone care.

Source: Amelia M. Haviland et al., "Do ‘Consumer-Directed' Health Plans Bend the Cost Curve Over Time?" National Bureau of Economic Research, March 2015.


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