Consumer Driven Round Up

While the whole world watches in wonder at the latest crises in Washington, the real market keeps chugging along, trying to overcome the distortions coming out of the nation’s capitol.

EBRI’s Latest Report. The Employee Benefits Research Institute (EBRI) has always been skeptical (at best) about consumer driven health care, but even EBRI is starting to see the value in this approach to financing. In May, it released the results of a survey looking at the “Characteristics of the CDHP Population, 2005 – 2010.”

It is curious that this EBRI report garnered so little attention. That alone suggests that the report is pretty favorable to consumer driven health.

And so it is. EBRI finds exactly what we have been arguing for years — that to the extent there is favorable selection into CDH plans, it is based on education more than anything else. 

This should not be surprising. Better educated people are the most likely to be early adopters of any new idea, and that is especially true in dealing with a complex system like health care. Better-educated people are more confident of their ability to understand and navigate through the complexity.

In this case the education gap is astonishing.  People in CDH plans are twice as likely to be a college graduate or have a graduate degree than people in “traditional” plans. People in traditional plans are four times more likely to have a high school education or less than are people in CDH plans. (See page 19 of the report.)

Since better-educated people are more likely to have higher incomes and to be healthier, CDH enrollees also have somewhat higher incomes and are somewhat healthier than people in traditional plans, but the difference is small — much smaller than the difference in education. For instance, in 2010, 59% of people in traditional plans reported that their health is “excellent or very good,” while 67% of people in CDHPs said the same.  Income differences were similarly small. Incomes between $100k and $150k were reported by 14% of CDHP enrollees and 15% of traditional enrollees, incomes of $150K and over were reported by 11% of CDHP enrollees and 10% of traditional enrollees.

This suggests that if the researchers controlled for education — that is, looked at the enrollment choices of people with similar educational levels — the CDHP people would actually be sicker and less wealthy than those in traditional plans.

So much for the ol’ “healthy and wealthy” argument. Thank you, EBRI.

Teachers Union Demands HSAs. In another odd twist on conventional wisdom, the teachers’ union in South Kingstown, Rhode Island has proposed switching their benefits to HSAs, but is getting resistance from the school board.

An article in the South County Independent reports that the union has proposed the switch “in order to save the $755,000 the School Committee is seeking to balance next year’s budget.” But, the article says, “the School Committee is cool to the idea, saying the savings are not guaranteed.”

A representative of the union says that other districts in the area have saved as much as 21% by adopting HSAs, and that Blue Cross quoted a 32% reduction if everyone was in the plan. She accuses the school board of “using hearsay, not facts,” in opposing the proposal.

In another odd twist, the union finds itself in alliance with the local Republican Party, which “has been promoting the idea for years.”

Devenir Reports $11.7 Billion in HSA Deposits. The investment firm Devenir reports on the results of its latest survey of the top 50 HSA administrators, and finds they now hold 6.3 million accounts and $11.7 billion in assets, an increase of 28% in accounts and 31% in assets over last year.

It also finds that the average account balance has grown 12.5% since the start of the year to $1,845, and that investment assets now total $860 million, and increase of 60% in the past year.

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