Consumer Driven Health Plans Continue to Grow in Popularity

Consumer Driven Health Plans Continue to Grow in Popularity
February 20, 2013

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)

The latest research from the Employment Benefits Research Institute shows that health savings accounts, a key feature of consumer driven health plans, continue to grow in popularity despite the Obama Administration's attempts to shortchange them. Here's the new research from EBRI:

Almost 70 percent of workers with an HRA or HSA said their employers contributed to the account in 2012, continuing a steady increase since 2009, EBRI found. Employer contributions of $200−$499 increased from 14 percent to 22 percent between 2009 and 2011, while employers that contributed $1,000 or more increased from 24 percent to 28 percent. Among workers with family coverage, employer contribution levels were unchanged between 2010 and 2012, with 63 percent contributing $1,000 or more...

“The share of the adult population with private health insurance enrolled in an HRA or with an HSA-eligible plan continues to increase, and employer contributions to the account also increased,” said Paul Fronstin, director of EBRI’s Health Research and Education program. “This may be due to the strengthening economy.”

HRAs and HSA-eligible health plans constitute what is called “consumer-driven” health plans (CDHPs). According to the 2012 CEHCS, 11.6 million adults ages 21–64 (or 7 percent of the population) were enrolled in a plan with an HRA or HSA. An additional 7 million reported that they were covered by an HSA-eligible plan but had not opened such an account. Thus, overall, 18.6 million adults ages 21–64 with private insurance, representing 15.4 percent of that market, were either in a CDHP or an HSA-eligible plan but had not opened the account that would be used to fund covered expenses. When their children were counted, 25.2 million individuals with private insurance, representing 14.6 percent of the market, were either in a CDHP or an HSA-eligible plan.

Indeed, the evidence seems to indicate that high deductible + HSA health plans are contributing to less spending and smarter spending on health care:

One circumstantial piece of evidence that this may be holding back spending is the composition of health care consumption. Higher deductibles may make one think twice about elective care for annoying but not debilitating conditions, whereas it probably won’t do much to deter one from visiting the hospital for a serious or life-threatening condition. Such a pattern appears in the recent data, as outpatient care has slowed markedly, whereas hospital care is expanding at about pre-recession levels.

President Obama's health care law has made these HSA plans less appealing, both by preventing them from paying for over-the-counter purchases and by making it very difficult if not impossible for such plans to be sold through the insurance exchanges because of the medical loss ratio requirements for plans. But that's a step which runs against the interests of the marketplace, where people seem to recognize the benefits of a consumer-driven approach.

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)