New evidence on consumer-directed health plans and health care utilization
Health care cost growth remains a concern of policy makers and employers. In recent years the rate of growth has decreased, and one proposed explanation is the rapid increase in cost sharing for workers with employer-sponsored health plans. The Kaiser Family Foundation found that the percentage of employees in the United States enrolled in Consumer-Directed Health Plans, defined as health plans with high deductibles paired with tax-advantaged savings accounts, increased from 4% in 2006 to 20% in 2013. By requiring enrollees to pay full price for services up through the deductible, CDHPs are meant to create more savvy consumers of health care. Despite the strong evidence that CDHPs reduce costs in the short run, it remains unclear whether these reductions reflect sophisticated decision-making by enrollees or indiscriminate reductions of all health care. Reductions in cost-effective preventive care, in particular, may lead to higher spending in the longer term. This proposed session includes three papers addressing these questions. The first paper, “Long Term Effects of Consumer-Directed Health Plans (CDHPs) on Use of Preventive Care” investigates use of primary preventive services among CDHP enrollees. The second paper, “Patient Responses to Incentives in Consumer-Directed Health Plans: Evidence from Pharmaceuticals” examines changes in use of prescription drugs providing secondary and tertiary prevention for chronic diseases. Finally, the third paper, “The Long Term Effects of Consumer-Directed Health Plans on Health Care Costs”, investigates whether short-term reductions in costs persist over time.