The first High Deductible Health Plans (HDHP) were offered 20 years ago, with the intention of reducing health care costs.\u00a0 The idea was to apply cost controls to the demand side of health care by increasing consumers’ exposure to the true costs of care.\u00a0(1) In other words, if consumers experience health care costs more directly, they will become better-informed about their options and therefore, smarter shoppers.<\/p>\n
The popularity of HDHP\u2019s increased with the creation of Health Savings Accounts (HSA) from which individuals can pay medical expenses on a pre-tax basis. Contributions to the HSA can be made by the individual and\/or the employer.\u00a0 So, have HDHP plans accomplished their goals?<\/p>\n
One recent study by the National Bureau of Economic Research (NBER) suggest that HDHP\u2019s have had only a small effect on medical spending growth. (2) \u00a0The findings conclude, \u201c\u2026 increasing patient cost-sharing [has] been shown to have some effect on lowering the level of spending as they are phased in, but, after they have been adopted and diffused, there is strong evidence that spending growth tends to resume its former path.\u201d\u00a0 In other words, initially after implementing HDHP\u2019s, there is a reduction in medical spending, but then the medical costs increase again.<\/p>\n
The one exception to this finding was with prescription drugs, where HDHP\u2019s did reduce prescription drug spending.<\/p>\n
Why do HDHP\u2019s fail to reduce health care spending?\u00a0 Here are some theories:<\/p>\n
The findings of this study conflict with earlier studies that found HDHP\u2019s did reduce health care spending.\u00a0 The most famous study was one conducted by Rand in 2006 (of medical spending between the years 1974 to 1982). (3)\u00a0 This study found that high deductible plans reduced medical spending by 30%.\u00a0 Perhaps the difference in findings between the recent NBER study and the older Rand study has to do with the increasing complexity of medical plan options and pricing.\u00a0 If so, the solution may be to require more transparency among health care providers.<\/p>\n
(1) https:\/\/www.healthaffairs.org\/do\/10.1377\/hpb20160204.950878\/full\/<\/a><\/p>\n