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Consumer-driven health plans can bend cost curve

NBER: Large companies lower healthcare costs after offering CDHPs

The consumer-driven health plan (CDHP) seems to bend the healthcare cost curve for large employers, according to a working paper from the National Bureau of Economic Research (NBER).

The NBER studied enrollment and claims data from 2004 to 2007 regarding the health plans offered by 54 large U.S. firms. In all, the data covered about 13 million individuals--5 million from firms that offered a CDHP and 8 million from those that did not.

Firms offering a CDHP lowered their healthcare costs 6.6 percent more than non-CDHP firms in the first year that such a plan was in place, according to the report. The difference in cost reduction was 4.3 percent in the second year and 3.4 percent the third year. In addition, annualized growth on drug spending was 5 percent to 9 percent lower among these firms than those who did not offer a CDHP, the report said.

"This result suggests that, at least at large employers, the impact of CDHPs persists and is not just a one-time reduction in spending," the report's authors note. "However, an important caveat is that the decrease in spending may be smaller in year 3 compared to year 1 post-offer."

Enrollment in CDHPs continues to grow, hitting an all-time high of 23 percent in 2014, FierceHealthPayer previously reported. This growth comes at the expense of PPO and HMO enrollment.

In addition to its ability to lower an employer's healthcare costs, a CDHP in theory reduces what consumers pay for healthcare services. Because CDHP deductibles are higher than those offered by PPO and HMO plans, consumers often think twice about the care they receive and shift their behavior in order to keep costs down.

However, the high deductible is not without a price: Many low- and moderate-income adults say their out-of-pocket healthcare costs are too high, causing many to skip preventive tests and seek care.

For more:
here's the report (.pdf)

Related Articles:
Consumer-driven health plans on the rise
Report: Out-of-pocket costs too high
Consumer-driven plans shift behaviors to cut costs
New reality: Consumer-driven healthcare