Friday, May 27, 2011

Consumer Driven Health Care - Who Are Its Users?

According to a report from the Employee Benefit Research Institute (EBRI), the times they are a-changin' (well, some guy named Bob Dylan said that first). Consumer-driven health plans (CDHPs) have been around for 10 years now. A recent EBRI study notes that in 2005, participants who enrolled in CDHP plans were more likely than those in non-CDHP plans to have income above $150,000. In 2010, more than half of those in CDHP had income between $50,000 and $100,000, but only about 1 in 7 had income over $100,000. Similarly, the study has found that participants who have more advanced education are more likely to be in CDHPs while those with only high school diplomas are more likely to be in non-CDHP plans.

What does this tell us? What should it tell us? Analyses that I have seen suggest that people who are more likely to know or understand what their choices are will enroll in CDHP plans. I disagree. Here is why. The study doesn't compare apples to apples. It doesn't say that each person in the study had a choice. It doesn't say that the choices were available on an equal basis.

Remember, companies often hire consultants to 'price' these plans for their participants. As the companies would often like to steer their employees to the CDHP plans, they instruct their consultants to price the options so that participants are more likely to choose the CDHP plans. Suppose a company offers only CDHP plans. In that case, even I can figure out that all employees who enroll in their company's health plan will be in a CDHP plan.

But, let's dig a bit deeper. Initially, when participants tended to have a choice, they looked at their options. One plan (the traditional) might have had a $500 deductible. The CDHP plan might have had a $3,000 deductible. Well, priced strategically, the $150,000 earner might say that all things considered (premiums plus medical expenses), the CDHP plan would likely cost them less. On the other hand, the $50,000 earner might say that they just can't afford the $3,000 deductible. 

Similar arguments can be made about education. Those with high levels of education are more likely to have higher income. 

The study also tells us that those in the CDHP plans generally have better health status and show better health behaviors than those in traditional plans. Again, is this the result of the CDHPs? Or, is it that those who are in excellent health are those less likely to have significant medical expenses and therefore more likely to opt for the lower premiums in the CDHP?

What the EBRI study doesn't look at are the medical care usage behaviors of those forced into CDHP plans. Anecdotal evidence suggests to me that many who are in CDHP plans against their will postpone medical coverage because they cannot afford it. Will the person who didn't go to the doctor in 2008 because they couldn't afford $2,500 out-of-pocket for the procedure they needed become a $100,000 patient in 2012? We don't know then answer to this, but people that I know tell me that either they or their friends have fallen into this category.

So, the people in the CDHP plans are who they are. Frankly, I don't think we really have a clue why.

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