Consumer-directed plans could generate savings, but not without risks

Consumer-directed health plans could save $57 billion annually if they grew to comprise 50 percent of all employer-sponsored health insurance in the United States, according to a newly released study from Rand Corp.

The study appears in the May edition of Health Affairs.

But such a shift would not be without potential risks, the authors noted. The plans, which include high-deductibles and the use of health savings accounts (HSAs), could lead to reduced use of recommended preventive care and other high-value health services.

“Continued pressures to cut costs, combined with incentives in the federal Affordable Care Act, make the 50 percent enrollment level plausible over the coming decade,” said study leader Amelia M. Haviland, a statistician at Carnegie Mellon University and Rand in a press release. “But given the limited information available to consumers regarding costs and quality, we need to carefully examine whether additional up-front patient costs will diminish the quality of healthcare.”

Consumer-directed plans have grown significantly over the past decade as employers look to lower the cost of their employer-sponsored health benefits. The plans have been touted as a way to create more price-conscious consumers because of the associated high deductibles and use of HSAs to fund employee health costs. Rand estimates that 13 percent of all workers with employer-sponsored insurance are currently enrolled in such plans.

The study estimates that if 50 percent of the people enrolled in employer-sponsored insurance chose a consumer-directed plan, it would save about 4 percent of total yearly healthcare expenditures. If adoption were to double from current rates to about 25 percent, savings would be between 1 percent and 2 percent of total spending.

“Consumer-directed health plans can clearly have a significant impact on costs, at least in the short term,” said Haviland. “What we don’t yet know is whether the cutbacks in care they trigger could result in poorer health or health emergencies down the road.”

While these benefits packages are touted as encouraging market-driven savings by encouraging price shopping and more informed consumption of health services, the Rand study indicated that only one-third of the savings from such plans were achieved by lower-spending per encounter. These findings suggest that some families enrolled in the plans were making different choices about tests and treatments. Among this group, the use of brand-name drugs, visits to specialists and elective hospital admissions was lower than families in traditional plans.

“People in consumer-directed plans initiate healthcare less often and when they do, they receive fewer or less costly health services than individuals in other health plans,” noted study co-author Neeraj Sood, an associate professor at the Schaeffer Center for Health Economics and Policy at USC and a Rand economist, in a prepared statement. “What we don’t yet know is whether the healthcare that was eliminated was unnecessary.”

The study also noted, however, that two-thirds of the savings from these health plans came as a result of fewer encounters with healthcare providers. It also found modest first-year reductions in use of highly recommended care such as cancer screenings and routine testing to monitor patients with diabetes -- despite the fact that some preventive care was offered at no cost.

“There needs to be better education of enrollees about plan features and how to navigate medical decision-making,” added Haviland. “The goal is to get patients to think critically about their care, not reduce high-value care that can help keep them healthy.”