CDH Round Up
We haven’t reported on what is happening in the market for Consumer Driven Health in a while, so there is a lot to look at.
Blue Cross
We’ll start with a study by the Health Care Service Corporation (the Blue plans in Illinois, Texas, Oklahoma and New Mexico) on the experience of their customers with their CDH plan, known as BlueEdge. Enrollment in BlueEdge has passed 1.5 million people this year and this study tracks them from before they entered the Consumer-Directed plans, which include both HSAs and HRAs.
A press release reports that BlueEdge enrollees –
- Were four percent more likely to use preventive services.
- Reduced overall utilization by 12 percent.
- Were 10 percent more likely to use generic medications.
- Spent 24 percent less on inpatient and 8 percent less on outpatient services.
- Reduced hospital ER care by 12 percent.
These are changes in behavior by the same people before and after they joined the BlueEdge program. Unfortunately, the study itself is not available to the public, but a summary on the company web site reports that the reductions grew over time, dropping by 9.1% in the first year, but by 11.4% over three years.
Western Michigan
An employer survey in West Michigan (Grand Rapids) reports that the percentage of employers offering HSA programs in that area grew by a third, from 30% in 2011 to 39% in 2012. The article quotes Bob Hughes of Advantage Benefits as saying, “(HSAs) will be the dominant plan down the road. It’s heading in that direction and nothing is going to stop it,”
M&T Bank
The Buffalo News reports that M&T Bank is doing a full replacement of its current PPO plans with an HSA program. It will offer its 15,000 employees a sliding scale HSA contribution based on salary.
Robert Wood Johnson Foundation
We have reported here before on an important study conducted by researchers at the Rand Corporation on CD Health. Now the funders of that study, the Robert Wood Johnson Foundation, has released its own report that highlights some additional information. The study authors write articles in several different publications and this report collects the key findings from the several articles, including that –
- Only plans with deductibles of at least $1,000 resulted in significant savings, and savings decreased with generous (more than or equal to $500) employer contributions to health care accounts.
- In almost all cases, the benefit designs of consumer-directed health plans affect lower-income populations and the chronically ill to the same extent as nonvulnerable populations. These effects include significant reductions in overall spending that increase with the level of the deductible. Greater reductions were found for high-deductible plans when paired with health savings accounts (employee- owned) in comparison to health reimbursement accounts (employer-owned).
- However, enrollment in consumer-directed health plans does lead to reductions in preventive care that are considered beneficial for all groups (for example, recommended cancer screening), even though the deductible is waived for preventive care in most of the high-deductible plans. This may have greater health consequences for lower-income and chronically ill people than for others.
- About two-thirds of the cost savings from enrollment in a consumer-directed health plan are from reductions in the number of episodes of care and the remaining one-third of the savings are from reductions in costs per episode.
Health Affairs
The Health Affairs blog picked up on this latest report in a post by Maribeth Shannon. She accepts that CDH plans are here to stay, but is concerned that consumers do not yet have enough information to use them wisely. She urges more attention be paid to helping consumers understand benefits, prices, and treatment options.
Indiana
Mitch Daniels (my choice for HHS Secretary in a Romney administration) wrote an op-ed in Human Events in which he writes –
The central contention of a book I recently wrote is that our liberty depends on the personal responsibility and accountability of individual citizens. Unfortunately, many, especially those setting national policy today believe that Americans are too intimidated, gullible or dim-witted to make wise, informed decisions about the important issues affecting their lives, and need their benevolent betters in government to do it for them.
He counters this mind set with Indiana’s experience with Health Savings Accounts, which he calls “an unqualified success.” He cites both the HSAs available to Indiana state employees, which were chosen by 90% of eligible workers this year, and with “Healthy Indiana,” the program for low-income Hoosiers, which now enrolls 50,000 people.
Will be interesting to see how HSA’s progress — and what about the Indiana initiative can be replicated nationwide.
Also, what will be the implications over the long term? I’d imagine people will be happy with their choice, but I’d like to hear some testimonials and follow-ups.
You would think more than four percent of BlueEdge members would use preventive services.
I wonder what percentages of the study for Health Care Service Corporation come from each state?
Pratika,
The release says CDH enrollees were “4% more likely” than non-CDH users, not that only 4% were using preventive services. It doesn’t report the total percentage using them.
It is a mystery to me why CDHC is even controversial. Public health advocates who worry about monetary incentives resulting perverse incentives should at least concede that some of the incentive to lower costs is desirable. I can only assume they still buy into the faulty argument that money spent on primary care is an investment that will reap rewards on better health and lower inpatient costs later on. It’s not true. For most people, money spent on primary care is wasted. It’s only on a select few that money spent on primary care actually makes a difference.
Very compelling numbers.
What an informative post! Looking forward to seeing how far HSAs go and how welcomed they are within the consumer market.
Thanks for the post Greg. None of this is surprising to me given the basic presumption of the “competing” health financing ideologies. CDHC necessarily causes the active involvement of the individual while Managed Care necessarily discourages active involvement of the care beneficiary.
By “active” I mean being involved in primary decisions on healthcare from start to finish, as opposed to dutifully following instructions from the insurance company, HMO or other centralized benefit distributor.
I know of no normal financial transaction in which the buyer and seller of services are more efficiently served through imposed third party direction.
Best number of the bunch: “CDHP members… reduced combined medical and pharmacy spend by an aggregate of 11 percent”
It’s important not to mix HSA and HRA plans under the CDH banner as RWJ does. In an HRA plan, there is a strong incentive to spend the employer contribution as it is not really “your money.”
You can’t stop the march of HSAs, they’re good the consumers, employers, and healthcare workers alike.
“She accepts that CDH plans are here to stay, but is concerned that consumers do not yet have enough information to use them wisely.”
Sounds like a bit too much like maternalism for me.
If the usage is lower, then the premium increases should be lower or non-existent. If not, how can these plans meet the medical loss ratios of Obamacare, which I understand to be 80% per policyholder; that is, the policyholder must have 80 cents in benefits for premiums paid, or a refund check is due.
Don Levit
Don, the HSA eligible high deductible plan offerings fall under the same ACA regs as any other “insurance” plan. Although this particular regulation is not long for this world, I am not sure whether or not these HDHPs are pooled with other policies within a given area diluting any underwriting margins accruing to the HDHPs.
Don and Frank – I believe they would have to be pooled into the same class of business overall for the given state for the given insurance family. Also, most of these are not in the individual market, so they are in the 85% loss ratio grouping. In general, however, I have serious actuarial doubts as the validity of the alleged savings all these studies suggest. I have, for example, studied the Mercer “analysis” from the last decade on the Indiana government employee HSA experience, and it leaves a lot to be desired, as does the Health Affairs reported study from earlier this year. There are serious actuarial questions about the conclusions drawn from these studies. Obviously, the Blue Cross story that leads this posting doesn’t disclose the necessary information required to raise or answer such questions. I will say I will be very interested in the referenced M&T Bank experience when it is forthcoming (if it is), as this is the only one that involves “total replacement” of which I am aware. Whether they are big enough to produce credible results is another question. But, with a total replacement “experiment,” and the necessary tracking of sub-populations from the before and after results, there might finally be some evidence that behavior change, other than the obvious that I don’t consider “new” information, can have an influence and actually produce a true, net savings to the overall cost profile.
H Carroll — I agree with you about the Blue Cross “study” reported here. I tried without success to get the actual study, but all I could get from them was the press release — Grrrrrr.
But the Rand study is solid. It is not enough to say it “leaves a lot to be desired.” Anything short of Nirvana “leaves a lot to be desired.” If you are waiting for a time when there is “nothing left to be desired,” you will wait a very long time.
I am all for more rigorous research (and I wish someone would fund some). But in the meantime, there is a ton of information from vendors, employers, academics, and consultants, that all show positive results. You would have to be blind to dismiss all of this.
+1 Carrol.
Transparency is an issue, go figure.
As an internist who sees mostly uninsured people or insured but with high deductible folks (mine is a cash practice), I am not surprised that many forgo “preventive” care. However, much of what we call “preventive” is something of a joke. Half of people who have heart attacks have “normal” cholesterol. It takes something like 628 healthy asymptomatic women to have screening mammograms for 6 years to save one life from breast cancer. Colonoscopy in asymptomatic patients has a yield of no more than 2.5%, according to the studies I have read, and some show even less. Naturally some of my well informed patients choose not to participate in such screenings. I just read an article commenting on how Medicare patients are getting too many colonoscopies. Cha ching!
I want to know the details about health care year wise percentage list .Can you provide the list ?
http://www.medicarenewmexico.com/