What Do We and EBRI Really Know About Consumer-Driven Health Plans?

by Clive Riddle, August 6, 2010

EBRI (Employee Benefit Research Institute) has just published a 28 page issue brief by Paul Fronstin, Director of EBRI’s Health Research and Education Program:  What Do We Really Know About Consumer-Driven Health Plans? A decade since their introduction in various forms that evolved over time, numerous studies consumer driven plans have since left a data trail that EBRI has followed and attempted to map.

The report concludes that: “the percentage of employers offering an HRA- or HSA-eligible plan increased from below 5 percent in 2005 to between 12−15 percent by 2009…. However, recently, the percentage of small firms that offered a CDHP declined while larger firms continued to add a CDHP as an option. Overall, 19.1 million, or 11 percent of people with either employment-based coverage or individually purchased insurance, were enrolled in a CDHP in 2009….Generally, premiums for CDHPs were lower than premiums for non-CDHPs….However, CDHP premiums may be lower than non-CDHP premium simply because the CDHP population is healthier, and there is some

evidence of this.…The studies agree that use of preventive services did not change (upward or downward) as a result of the CDHP…. Concerning how CDHPs affect prescription drug use, studies found that overall use of brand-name prescription drugs fell… CDHP enrollees increased their use of the mail-order pharmacy option.”

Perhaps the most meaningful analysis of other studies is saved for last: “While HRAs and HSA-eligible plans look a lot alike, the differences are significant enough to warrant separate analyses of the impact of the plans. Also, most of the research to date has focused on plan design and has ignored the impact of the consumer-driven account on use of health care services and overall spending. Individual contributions to HSAs and employer contributions to both HSAs and HRAs may affect the use of health care services. Furthermore, account balances may have an effect as well: Individuals may use health care services differently, depending on how much money is being contributed to the account, especially relative to the deductible; amounts rolled over; and portability of the account. Despite the growing body of evidence on the effect of CDHPs on cost and quality, there are many unanswered questions.”

The conclusion might de-emphasize the increase in employer popularity with the plans over time, although certainly greater with larger vs. smaller employers as the report notes. The KFF HRET annual survey cited found offer rates with large employers (1,000+) increasing from 10% to 29% from 2005 to 2009, and the Mercer annual survey cited found large employee offer rates ranging from 4% (1,000 – 4,999 employees) to 22% (20,000+)  in 2005, increasing to a range of 24%  (1,000 – 4,999 employees) to 47% (20,000+)  in 2010.

The report conclusions emphasize that offer rates may have stalled with smaller employers, evident in the KFF HRET study, but not evident in the Mercer study. The report detail does provide some meaningful disclosure regarding the oft quoted KFF HRET CDHP data: “Unlike other studies, the survey did not find growth in enrollment between 2008 and 2009. The KFF/HRET survey does not include nonworking adults or children in its estimates. It also does not include federal employees or workers in firms with fewer than three employees. The lack of growth may be due to large margins of error for data related to CDHPs in this survey. The lack of growth may also be due to the fact that, while the survey shows growth in offer rates in large firms, it shows a decline in offer rates among small firms (contrary to the Mercer findings). Because there are many more small firms than large firms, the overall offer rate declined slightly as well.”

Tracking consumer driven enrollment data can be maddening. The report cites six major sources the publish enrollment data, with somewhat materially different results. Variances are due to many factors, from differences in study methodologies as discussed above, to fundamental differences in what is defined as a consumer driven health plan. Should the numbers include all qualified high deductible health plans (HDHPs) even if they have no account based plan attached? Should they include FSAs? Should they include enrollment in other consumerism-labeled products?

Many assume numbers and studies quoted examine just HSA and HRA account based plans. This is not always the case. The EBRI report makes a great attempt as sifting through the data to examine the true HSA and HRA findings. But still, after a decade, as the report concludes, “there are many unanswered questions.”