Transcript NOTE

Consumer Driven Health Plans:
Empirical evidence of take-up, cost and
utilization and HSA policy implications.
Stephen T Parente, Roger Feldman, Jon B Christianson
Presentation to the National Association of Business Economics (NABE),
Washington, DC, March 13, 2006
Sponsored by the Robert Wood Johnson Foundation’s Health Care
Financing & Organization Initiative (HCFO)
and the U.S. Department of Health and Human Services
Presentation Overview






What is a Consumer Drive Health Plan (CDHP)?
Policy Questions
National CDHP Take-up
Cost & Utilization Comparisons Over Time
National HSA Simulation
Policy Implications
‘Classic’ CDHP Model – Definity Health
Health Tools
and Resources
Health Tools and Resources
• Care management program
• Internet enabled
1
2
$$
Definity
Health
Care
Advantage
Annual
Deductible
HRA
Employer selects which expense apply toward the Health Coverage annual deductible.
Paid out of employer’s general assets.
Preventive Care 100%
Health Coverage
• Preventive care covered 100%
• Annual deductible
• Expenses beyond the HRA
Health
Coverage
Annual Deductible
Health Reimbursement Account (HRA)
• Employer allocates HRA1
• Member directs HRA
• Roll over at year-end
• Apply toward deductible2
Web- and
PhoneBased
Tools
CDHP Version 2.0:
The Health Savings Account (HSA)
$$
Pretty similar to
Definity Health HRA
Design except
the consumers owns
the account.
Annual Deductible
MMA 2003.
Annual
Deductible
HSA
Preventive Care 100%
HSAs legislated in
Health
Coverage
Conceptual Model of CDHP
Money
b
a
CDHP Budget
c
Coinsurance
Plan Budget
Medical Care
Low Use
High Use
Medium Use
Policy Questions to be Addressed
 Do CDHPs (in the form of HRAs) have national appeal?
 What are the longer-run cost & use consequences of
CDHPs?
 Where do they save money?
 What is the impact on pharmacy services, where consumers can
act in a ‘directed’ fashion?
 Do HSAs have potential national appeal?
 Are HSAs a viable approach to addressing the problem
of the uninsured?
FYI: We are just approaching the half-way point of our
research.
Nearly National Appeal of HRAs:
States where the study employers’ 1st year CDHP take-up was >5%
Take-up
>5%
0.1 - 5%
0%
Employer-based Analysis Overview




Analysis started in 2002 with six employers
Combined population drawn from 50 states
Total covered lives represented: ~250,000
Collect primarily employer HR data and
insurance claims data for all plans.
 New HCFO grant will create a study panel with
six total years of CDHP experience 2001-2006.
What is the impact of CDHPs on
cost & use?
 Study Design:
 First results reported in 2004, August, Health Services
Research.
 Look at CDHP/PPO/POS cohorts within one large
employer for employees over time to see ‘longer run’
impact of CDHP in 2001 - 2003.
 Control for several factors to ADJUST cost & use
estimates:
 Health status/illness burden/health shocks
(cancer, catastrophic accident)
 Income
 Family size and dependents
 Age, gender
Study Setting
 Large employer that offered HMO and PPO in 2000-2003
and introduced CDHP in 2001
 Variation in cost sharing by contract
 Take-up of CDHP approximately 15%
 Smaller account/deductible gap, 0% co-insurance on
catastrophic
 General caveat: ANY Employer’s experience can be quite
different due to:
 Alternatives offered
 Plan design
 Communications with employees
 Sponsor’s objectives for the plan
New Results: Impact of CDHP and PPO on
Cost Compared to POS
All Annual Plan Effects Using POS Plan as baseline.
2000
Mean
Health Plan Cohorts
CDHP Cohort N=429
Total Expenditure
Employer Expenditure
Employee Expenditure
PPO Cohort N=1,025
Total Expenditure
Employer Expenditure
Employee Expenditure
$
$
4,037
3,627
$
410
$
4,661
$
$
4,172
490
2001
Plan Effects
2002
Plan Effects
2003
Plan Effects
Probit
GLM
Probit
GLM
Probit
GLM
-0.111
0.269
0.187
4.1%
26.0%
22.6%
-0.077
0.222
0.222
11.2%
-2.083
43.0%
38.9%
-2.149
36.8%
30.1%
-1.723
39.6%
Probit
GLM
Probit
GLM
Probit
GLM
-0.082
-0.087
-0.161
8.3%
16.8%
9.5%
-0.104
-0.127
-0.183
11.2%
-0.041
-7.0%
20.0%
-0.003
-3.3%
12.4%
-0.060
-9.6%
Model
Stage
NOTE:
Notes: These are results from a restricted continuously enrolled sample of 27% of the total
employee
and trends,
are not
a reflection
theplan
plans’
full
prescription drug experience.
Regressionspopulation
adjusted by annual
health
plan choice, of
health
choice
interacted
with annualThese
trends,are
ageresults
gender,from
income,
number of covered
lives in enrolled
contract, use
of an of 26% of the total employee population
NOTES:
a restricted
continuously
sample
healthcare
flexible
spendingofaccount.
and
are not
a reflection
the plans’ expenditures. Bolded numbers are significant at p<.05.
Impact of CDHP and PPO on Physician, Hospital
and Pharmacy Cost Compared to POS
All Annual Plan Effects Using POS Plan as baseline.
2000
Mean
Health Plan Cohorts
CDHP Cohort N=429
Hospital Expenditure
Physician Expenditure
Pharmacy Expenditure
PPO Cohort N=1,025
Hospital Expenditure
Physician Expenditure
Pharmacy Expenditure
$
$
1,332
1,891
$
814
$
1,669
$
$
1,958
1,034
Model
2001
2002
2003
Stage Plan Effects Plan Effects Plan Effects
Probit
GLM
Probit
GLM
Probit
GLM
Probit
GLM
Probit
GLM
Probit
GLM
-0.109
0.069
-0.050
60.8%
119.7%
75.5%
-0.089
0.311
-0.007
10.7%
-0.086
-14.7%
20.2%
-0.061
-5.1%
25.1%
0.256
-3.9%
0.109
0.106
-0.091
23.8%
24.4%
29.0%
-0.105
-0.055
-0.174
5.9%
-0.029
8.3%
10.2%
-0.096
22.7%
6.7%
0.047
9.9%
NOTE:
Notes: These are results from a restricted continuously enrolled sample of 27% of the total
employee
population
andfrom
are
a reflection
of health
the enrolled
plans’
full
prescription
drug
experience.
NOTE: These
areby
results
anot
restricted
continuously
sample
of 26% of the
total
employee population
Regressions
adjusted
annual
trends,
health
plan
choice,
plan choice
interacted
and
are not
a reflection
of the
plans’number
expenditures.
with
annual
trends,
age gender,
income,
of covered lives in contract, use of an
healthcare flexible spending account.
Is brand name pharmacy use different
for CDHP enrollees?
Health Plan Cohorts
CDHP Cohort N=429
Brand Name Drug Use
Generic Drug Use
Proportion of Brand
PPO Cohort N=1,025
Brand Name Drug Use
Generic Drug Use
Proportion of Brand
2000
Mean
Model
Stage
7.45
9.65
0.34
10.66
11.66
0.40
2001
Plan Effects
2002
Plan Effects
2003
Plan Effects
Probit
GLM
Probit
GLM
Probit
GLM
-0.129
0.249
0.381
0.141
0.147
0.138
-0.105
0.276
0.275
-0.063
n/a
0.013
-0.183
n/a
0.079
0.170
n/a
0.049
Probit
GLM
Probit
GLM
Probit
GLM
-0.103
-0.199
-0.158
0.087
-0.035
0.022
-0.003
-0.158
-0.103
-0.065
n/a
-0.005
-0.299
n/a
0.026
-0.110
n/a
0.004
Notes:
NOTE: These are results from a restricted continuously enrolled sample of 27% of the total
Regressions
by annual
trends,
choice, health
plan
choicefull
interacted
employeeadjusted
population
and
are health
not aplan
reflection
of the
plans’
prescription drug experience.
with annual trends, age gender, income, number of covered lives in contract, use of an
healthcare flexible spending account.
Estimates are based on a two part model.
Is there a difference in pharmacy use for
CDHP patients with chronic conditions?
Health Plan Cohorts
CDHP Cohort N=429
Chronic Medical Rx Use
Chronic Psych Rx Use
2001
Mean
Model
Stage
2001
Plan Effects
2002
Plan Effects
2003
Plan Effects
9.68
Probit
GLM
Probit
GLM
Probit
GLM
-0.037
0.294
0.176
-0.052
-0.037
-0.179
0.294
0.171
0.176
-0.052
0.015
0.065
-0.179
-0.063
0.010
0.171
0.031
0.222
Probit
GLM
Probit
GLM
Probit
GLM
0.020
0.060
-0.087
-0.013
-0.274
-0.138
-0.066
0.052
-0.023
-0.032
-0.070
-0.021
-0.312
-0.121
-0.237
-0.170
0.005
-0.035
6.90
Non-Chronic Rx Use
7.41
PPO Cohort N=1,025
Chronic Medical Rx Use
14.51
Chronic Psych Rx Use
Non-Chronic Rx Use
10.00
7.81
Notes:
NOTE: These are results from a restricted continuously enrolled sample of 27% of the total
Regressions adjusted by annual trends, health plan choice, health plan choice interacted
employee
population and are not a reflection of the plans’ full prescription drug experience.
with annual trends, age gender, income, number of covered lives in contract, use of an
NOTE: These
resultsaccount.
from a restricted continuously enrolled sample of 27% of the total employee population
healthcare
flexibleare
spending
and
are
not
a
reflection
of
the model.
plans’ full prescription drug experience.
Estimates are based on a two part
1
1
Overall Cost & Use Results Summary
 CDHP plan did not have the lowest cost and
utilization across all plans.
 CDHP best (lowest) cost result was for
pharmacy.
 CDHP worse (highest) cost result was for
hospital expenditures (inpatient & outpatient). –
partially explained by pent-up demand for
elective procedures & provider pricing
differences across years.
Pharmacy Summary
 Costs down initially – volume does not decrease at
same time – suggests more frugal Rx use (e.g., greater
use of mail order).
 CDHP chronic condition cohort drug use is generally
higher than other health plans, though rarely
statistically significant.
 Brand name drug use higher in CDHP, but overall
cost is lower.
Using HRA Results to Explore HSA
Policy Questions
 What is the expected take-up rate of HSAs in the
individual market?
 What is the likely impact of the Administration’s
HSA sproposals?
 Take-up rate of HSAs with subsidies
 Reduction in the number of uninsured
 Cost of the subsidy
 What is the impact of other possible subsidy
designs?
Data Sources
 2002 health plan choice data from 3 large employers
participating in a Robert Wood Johnson Foundation
funded study on CDHPs
 Employee premium, deductible, coinsurance, worker’s age,
gender, wage income, single/family coverage
 2001 Medical Expenditure Panel Survey (MEPS)
 Household Component
 Linked Insurance Component
 eHealthinsurance.com
 Individual HSA plan information
Plan Choice Model Analytic Approach

Plan Choices: HMO, 3 PPOs (low, medium, high), 2 CDHPs with Health
Reimbursement Accounts (low and high)
 Utility-maximization assumption where Uhj = aj + Zj + Xhj + ehj
 Estimate a conditional logit model of plan choice using the pooled,
employer data
 Explanatory variables

Plan attributes (Z)





Interactions between employee and plan attributes (X)


Annual tax-adjusted employee premium ($1000s dollars)
Savings/reimbursement account size ($1000s dollars)
Donut hole: difference between annual deductible and account size ($1000s
dollars)
Coinsurance rate (i.e., .10 = 10% coinsurance)
Age, female, wage income, family contract
Plan-specific constants (aj )
Price elasticity estimates from the plan
choice model
PriceVariable
Elasticity
Tax adjusted Employee Premium in $1,000
-0.9213
Employee's Health Account in $1,000
0.0885
∆ Between Deductible and Health Account in $1,000
-0.2430
Coinsurance (e.g., 15% = .15)
-0.5405
Policy Simulations
 Baseline take-up of HSAs from the Medicare Modernization Act
of 2003
 Simulation (1): Bush Administration’s 2004 proposal
 Refundable tax credit up to 90% of premium; maximum of
$1000/adult, $500/child (up to two)
 Subsidy for singles with no dependents phased out at
$30,000 adjusted gross income and $60,000 for families
 Simulation (2): 2006 State of the Union Proposal
 Simulation (3): Level the Playing Field
 Simulation (4): Full subsidy of HSA premium
Baseline Impact of MMA 2003
Plan Choice
INDIVIDUAL
MARKET
EMPLOYER
INSURANCE
OFFERED
MARKET
Baseline
Baseline
(unsubsidized) (unsubsidized)
Population %
Project Pop.
HSA-Full Price
PPO_High $$
PPO_Low $$
PPO_Medium $$
Uninsured
10%
7%
0%
2%
42%
3,718,406
4,723,249
310,506
1,449,914
26,614,028
HMO
HRA
HSA-Shared Prem
HSA-Full Price
PPO_High $$
PPO_Low $$
PPO_Medium $$
Turned Down
30%
2%
1%
3%
7%
2%
42%
13%
25,463,908
1,734,762
496,066
2,740,252
6,039,150
1,580,929
35,826,315
10,838,203
NOTE: Population is 19-64, non public insurance
HSA Summary & Next Steps
 HSA Plan design matters – We find a greater takeup from a reduction in the donut hole than an
increase in the account size.
 Administration proposals to tax advantage HSAs will
increase their take-up and reduce the number of
uninsured, at the margin.
 Look at HSA take-up versus retirement saving choice
is a new frontier to examine.
Thank You!
For more information on our research, please visit:
www.ehealthplan.org
Stephen T. Parente, Ph.D., M.P.H., M.S.
Assistant Professor, Department of Finance
Deputy Director, Medical Industry Leadership Institute
Carlson School of Management
University of Minnesota
321 19th Ave. South, Room 3-149
Minneapolis, MN 55455
612-624-1391 (v)
[email protected]
http://www.tc.um.edu/~paren010