The RAND researchers we reviewed before have come out with a follow-up study in Health Affairs of the potential impact of consumer driven plans on the American health care system. This is “Growth Of Consumer-Directed Health Plans To One-Half Of All Employer-Sponsored Insurance Could Save $57 Billion Annually,” by Amelia M. Haviland, M. Susan Marquis, Roland D. McDevitt, and Neeraj Sood.
Most of the media reports have been reasonably accurate, see The Hill and The Washington Post, but have missed the real potential in the study.
The media reports have focused on the study’s conclusion that if half the people with employer-based plans were in a consumer driven plan, the system-wide savings would be $57.1 billion. But this is a mid-range estimate that assumes an equal mix of health reembursement arrangement (HRA) and health savings account (HSA) approaches. The study acknowledges that HSAs are far more cost-effective, and estimates that, if all of these people were in HSA plans the annual savings would be $73.6 billion.
Now that is a pretty big chunk of change, but even it likely underestimates the impact. The study’s authors write:
This estimate was based on cost reductions in the first year of consumer-directed plan enrollment and did not assume any reduction in cost trends for these enrollees.
First year savings are the least of it. The real value of consumer driven approaches is that trend is reduced and the savings mount up over time. The 2009 study by the American Academy of Actuaries, for one, found that the trend over time for CDHPs ranged from 12 to 17 percent lower than for traditional plans. (By the way, this new RAND study is one of the very few, if any, to cite the AAA study as a source.)
This difference in the experience of HRAs and HSAs is particularly important because this study relies on data from 59 large employers from 2003 to 2007. HSAs were signed into law in December 2003, and didn’t really go into effect until 2005. So the HSA experience studied here must have been very limited.
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