Health Insurance HSA

Do HDHPs save money?

This is the question that Zhang et al. (2017) attempt to answer using data form people who switched to a high-deductible health plan (HDHP) compared to those who stayed in the same plan.  They found:

After enrollment in HDHPs, 28 percent of enrollees changed physicians for office visits (compared to 19 percent in the Traditional Plan group, p < .01); however, this did not result in a statistically significant reduction in price for office visits. About 25 percent of enrollees changed providers for laboratory tests (compared to 23 percent in the Traditional Plan group, p < .01), resulting in savings of about $2.09 or a 12.8 percent reduction in price per laboratory test. We found that HDHPs had lower negotiated prices for office visits but not for laboratory tests.

In short, there is some evidence for cost saving and very modest price shopping effects.  Based on this study at least, demand curves do still slope down, but one shouldn’t expect the increased use of HDHPs to results in extremely large cost savings.


1 Comment

  1. Seems to me most studies of this type, including this one, do not address an important question. Specifically, how did the costs for people that switched from conventional insurance to HDHP in the 2 years before they switched, compare with the costs for the same period for people that did not switch? Answering this question requires isolating individual historical utilization, then recombining it into two groups, switchers and non-switchers.

    If on average the switcher group consumed fewer medical resources before the switch than the non-switcher group, what does it prove to compare the cost of the two groups only in the year(s) after the switch takes place? Wouldn’t a before-and-after comparison be a better measure for each group? If healthier people are more likely to enroll in HDHP in the first place, perhaps the total costs for both groups together don’t really change much. Wouldn’t it be useful to know if that were true? Or not true?

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