EvidenceBased Public Policy: CDHPs and Health Reform

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Evidence-Based Public PolicyCDHPs and Health
Reform

• Greg Scandlen

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Promises, promises

• 1988, Massachusetts Governor Michael Dukakis
• Massachusetts will be the first state in the
  country to enact universal health insurance.
• 1989, Oregon Governor Barbara Roberts
• Today our dreams of providing effective and
  affordable health care to all Oregonians have
  come true.
• 1992, Tennessee Governor Ned McWherter Tennessee
  will cover at least 95 percent of its citizens.
• 1992, Vermont Governor Howard Dean
• "This is an incredibly exciting moment that
  should make all Vermonters proud."
• Similar Results in Maine, Kentucky, Washington,
  etc.

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Promises, promises

• Ditto for the old panaceas--
• Health Planning
• Small Group Reform
• Managed Care
• Community Rating
• COBRA, HIPPA
• Medicaid, SCHIP
• Medicare Catastrophic
• And so it shall be for the new panaceas --
• Mandatory Health Information Technology
• Pay for Performance
• Disease Management
• Comparative Effectiveness Research

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None solve the essential problem --
Insurer

• Third Party Payment

Consumer
Provider
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Roll-Out of CDHPs

• 1996 -- Medical Savings Accounts
• Individuals and Small Group Only
• Limits on enrollment, time
• Confusing, complicated
• 2002 -- Health Reimbursement Arrangements
• Go with any kind of coverage
• Health only, employer-owned
• 2004 -- Health Savings Accounts
• Everybody, but Medicare
• Individually owned, portable
• 2007 -- Medicare MSAs
• Available nationally in 2008

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Predictions of 2002

• 1. CDHPs will increase cost awareness, leading
  to
• 2. Greater caution in the use of care, leading
  to
• 3. Growing demand for information, leading to
• 4. Better compliance with prevention and
  treatment, leading to
• 5. Lower use of unnecessary care, leading to
• 6. Lower rate of growth in health care costs,
  leading to
• 7. Faster take-up of these programs, leading to
• 9. New demands for health services delivery that
  is more accountable, more efficient, more
  convenient, and of better quality that what we
  have had in the past.

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Intense Debate Over HSAs

• HSAs are good only for the healthy wealthy.
• Actually, good for the healthy and the sick.
• OOP exposure is limited.
• Saving money benefits non-wealthy more.
• Tax break would not help those who pay no taxes.
• True, but premium savings are worth more.
• Selection would raise costs for non-CDHPs.
• Selection mostly around education.
• Savings appear to be system-wide

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Intense Debate Over HSAs

• Consumers are not capable of deciding.
• Who else should decide?
• Need information first.
• No, need power first. Information will follow
• High OOP would deter timely care
• Experience shows just the opposite.
• Prevention is usually covered.

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Results Six Years Later

• 1. Patient behavior is changing -- people are
  being more cautious about needless use of
  services.
• 2. Consumers are more compliant with treatment
  regimens, especially those with chronic
  conditions.
• 3. The rate of increase in health care costs is
  down substantially for people and groups in these
  plans.
• 4. The demand for information, transparent
  prices, and patient support services is high.
• 5. The adoption rate in the benefits market is
  sizzling.
• 6. The transformation of service delivery is
  beginning, though still very formative. Early
  indicators include the growth of retail clinics,
  concierge medicine practices, and medical
  tourism.

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Cost Sensitivity

• BCBSA, 2007 -- CDHP enrollees are more likely to
• Research doctor costs 14 HSAs 4 non-CDHPs
• Research hospital costs 10 HSAs 3 non-CDHPs
• Track health care expenses 63 of HSAs 43 of
  non-CDHPs
• Estimate future health care expenses 38 of
  HSAs 19 of non-CDHPs
• Save for future health care expenses 47 of
  HSAs 18 of non-CDHPs
• Aetna, 2009 -- CDHP enrollees had
• 10 lower use of primary care physicians
• 15 lower use of specialists
• Better use of prevention and information
• Met or exceeded other measures of behavior
• JAMA, 2007 -- CDHP enrollees had
• 10 fewer ER visits
• 25 fewer repeat visits
• Almost entirely for non-severe conditions

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Better Compliance

• Blue Cross Blue Shield Association, 2007
• CDHP enrollees are more likely to
• Research doctor quality 20 of HSA enrollees
  14 of non-CDHP enrollees
• Research hospital quality 12 of HSA enrollees
  7 of non-CDHP enrollees
• CIGNA, 2009
• Choice Fund members are more compliant with
  medications that manage ongoing conditions, and
  more discerning in their use of medications with
  over-the-counter alternatives.
• While overall cost trends were down 13 for CD
  Health enrollees, it was down 18 for those with
  hypertension and down 20 for those with diabetes

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Better Prevention

• Blue Cross Blue Shield Association, 2007
• CDHP enrollees are more likely to participate in
• Smoking Cessation 20 of HSAs 6 of non CDHPs
• Stress Management 22 of HSAs 8 of non-CDHPs
• Nutrition Programs 27 of HSAs 12 of non-CDHPs
• Exercise Programs 29 of HSAs 12 of non-CDHPs
• McKinsey Company, 2005
• CDHP enrollees had
• 25 more likely to engage in healthy behaviors
  and 30 more likely to get an annual physical

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Better Prevention

• CIGNA (January, 2009)
• Preventive care visits per 1,000 members was 387
  for HMO and PPO, but 448 for first year CD Health
  enrollees and 443 for second year enrollees.
• United Health Group 2007
• CDHP enrollees are
• Far more likely to see a doctor for diabetes (73
  vs. 54)
• 16 more likely to receive HbA1c tests if they
  have diabetes
• 22 more likely to have lipid tests if they have
  coronary artery disease
• 6 more likely to use ACE inhibitors, 41 more
  likely to get creatinine tests and 26 more
  likely to receive potassium tests if they have
  CHF
• 16 more likely to get cervical and prostate
  screening
• 10 more likely to get cholesterol screening

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Cost Trends

• United Benefit Advisors --
• The cost of CDHPs went up just 2.7 in 2006,
  compared to 7.2 for all health plans.
• Deloitte --
• Trend for CD Health plans in 2006 was 2.6, as
  opposed to 7.4 for HMOs, 7.5 for PPOs, 7.3 for
  POS, and 6.6 for traditional indemnity coverage.
  
• Cigna (January, 2009)
• Trend for HMOs and PPOs 10.6 from 2007 to 2008,
  but down 3.3 for CD Health products. The longer
  a group is enrolled, the greater the difference
  in trend -- 13 in year one, 14 in year two, 16
  in year three.

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Cost Trends

• KFF/HRET -- Annual Family Premium, 2008
• HMO 13,122
• PPO 12,937
• HDHP/SO 10,121
• Aetna (2009)-- Five year trend
• Full Replacement employers saved 21 million per
  10,000 employees
• Option employers saved 7 million per 10,000
  employees
• Mercer -- Per employee cost and trend from 2006
  to 2007
• PPO 7,352 6.1
• HMO 7,129 7.6
• HRA 6,224 3.5
• HSA 5,679 3.5

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Enrollment Trends

• Census Bureau NHIS Survey (2008)
• 20.3 of people under age 65 are covered by a
  HDHP
• KFF/HRET Survey (2008)
• 18 of workers are covered by a HDHP.
• United Benefit Advisors (2008) -- 43 more
  companies offered CDHPs in 2008 than in 2007, now
  comprising 13 of all plans offered. Employees
  enrolled nearly doubled from 6 in 2007 to 11.2
  in 2008.
• AHIP -- HSA-Qualified plans
• 3/1/05 -- 1.0 million
• 1/1/06 -- 3.2 million
• 1/1/07 -- 4.5 million.
• 1/1/08 -- 6.1 million
• Expected 1/1/09 -- 9 million

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Enrollment Trends

• Mercer -- Employers offering
• Under 500 workers
• 5 in 2006
• 11 in 2008
• 500 20,000 workers
• 11 in 2006
• 20 in 2008
• Over 20,000 workers
• 37 in 2006
• 43 in 2008
• BCBCA -- HSAs available to
• 34 in 2005
• 49 in 2007
• 69 in 2008

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Other Consequences

• The Revolution is Growing
• The advent of retail clinics.
• The growth of concierge medicine and cash-only
  medical practices.
• Hospitals abandoning their old practice of
  billing self-pay patients the highest possible
  charge.
• Health plans moving from leveraged discounts to
  customer service.
• The advent of low-cost retail generic drugs.
• The growth of medical tourism and physician-owned
  specialty hospitals.
• Converting from employer-based to
  individually-owned coverage.
• The growth of information technology.
• Rejection of government-run insurance programs.

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Contact

• Greg Scandlen
• Consumers for Health Care Choices
• www.chcchoices.org
• 301-606-7364
• greg_at_chcchoices.org