Is Consumerism at Odds with Prevention? The indirect effects of consumer- directed health plans on preventive service utilization Stephen T Parente, University of Minnesota Giridhar Mallya, University of Pennsylvania Craig Pollack, University of Pennsylvania Daniel Polsky, University of Pennsylvania Roger Feldman, University of Minnesota William McGuire Presentation at the American Society of Health Economics, June 24, 2008 Sponsored by the Robert Wood Johnson Foundation’s Health Care Financing & Organization Initiative (HCFO) and the U.S. Department of Health and Human Services
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Is Consumerism at Odds with Prevention? The indirect effects of consumer-directed health plans on preventive service utilization Stephen T Parente, University.
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Is Consumerism at Odds with Prevention?
The indirect effects of consumer-directed health plans on preventive service utilizationStephen T Parente, University of MinnesotaGiridhar Mallya, University of PennsylvaniaCraig Pollack, University of PennsylvaniaDaniel Polsky, University of PennsylvaniaRoger Feldman, University of MinnesotaWilliam McGuire
Presentation at the American Society of Health Economics, June 24, 2008
Sponsored by the Robert Wood Johnson Foundation’s Health Care Financing & Organization Initiative (HCFO) and the U.S. Department of Health and Human Services
Presentation Overview
Background Research Question Research Setting Empirical Approach Caveats Results Discussion
Consumer Driven Health Plans
Annual Annual DeductibleDeductible
Annual Annual DeductibleDeductible
Pre
ven
tive C
are
P
reven
tive C
are
1
00
%1
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%
Health Health CoverageCoverage
An
nu
al
Ded
uct
ible
HSA/HRAHSA/HRAHSA/HRAHSA/HRA
$$
• Consumer owns the Health Savings/Reimbursement Account (HSA/HRA)
• Unused $$ roll-over at year end• HSA must be purchased with
complementary high deductible health plan (HDHP)
• Can be purchased by consumers in the state-regulated individual or small group markets.
• Employers provide HSAs/HRAs as part of their benefits package.
• Money deposited in HSAs is tax-advantaged.
• For HSA, unused $$ at 59 years of age can be used for medical care and retirement.
• For HSA, early withdrawal penalty for any use other than healthcare.
Previous Literature Rowe, et al (2008), compare preventive care rates in
CDHP and a PPO settings managed by Aetna – No difference in prevention.
Mallya, et al (2007): compare preventive care rates in CDHP and traditional plan in one employer: In CDHPs -fewer preventive care visits; more pap smears.
Busch, et al (2006), Alcoa mandated high-deductible coverage for a subset of employees. Found no significant difference in preventive care use.
Wharam, et al (2008), total replacement study. Little change in cancer screening. Closest to this study.
Research Questions Primary: What is the impact of
consumer driven health plans on preventive care?
Secondary: What factors affect the utilization of preventive care when offered in a total health plan replacement setting with a CDHP?
Conceptual Model
Health benefit design affects the demand for medical care, including preventive services.
Increased patient copayment acts as price increase in medical care demand.
Can be empirically tested by the evaluation of a reduced form expression of the demand for medical care in a CDHP total replacement with higher cost sharing.
Data to Address Research Questions
Four Large employers with over 50,000 covered lives.
Medical & Pharmacy claims and enrollment data or two years: pre and post implementation of CDHP design.
The employers had a full replacement of their PPO/POS plan designs with a CDHP design.
Two of four employers adopted CDHP design later in 2006, the rest in 2005.
Continuously enrolled sample for two years.
Econometric ApproachUse a two part model to complete a
Difference-in-difference estimate of the effect of expenditure on of a CDHP total replacement.
Evaluate probability of getting any preventive care use for a set of specific measures: Any preventive care visit Colonoscopy screening age 40 to 64 Mammography screening, women aged 40 to 64 Cervical cancer screening, women aged 24 to 64
Use firm-specific interaction with the second year of adoption to identify the impact of CDHP total replacement.
Caveats
Unlike previous work, we can not control for the impact on income.
There is unexplained market level variation. Have considered using state-effects as a correction.
Early results.
Attributes of Individuals w/Coverage at Baseline from 4 Firms
Summary of Empirical Findings Total replacement with CDHPs achieves a level of
cost savings not seen in previous empirical studies where consumers had other plan choices.
Significant increases in consumer expenditures found in some firms.
General decrease or neutral affect on prevention. Few of the changes in preventive care measures were statistically significant.
At best consumerism affects prevention in a neutral fashion. At worse, consumers use prevention less.
Irony is that prevention was covered at 100% reimbursement with no cost-sharing in all of the firms.
Next Steps
Get more precise firms specific affects beyond a linear probability model.
Address selection more completely.Bootstrap correct standard errors for
interaction affects on expenditure and utilization. Prior work has shown the bootstrapped significance is not as significant as the non bootstrapped method.
Try to find firms with second and third year post replacement affects
Thank You!
For more information on our research, please visit:
www.ehealthplan.org
Stephen T. Parente, Ph.D., M.P.H., M.S.Associate Professor, Department of FinanceDirector, Medical Industry Leadership InstituteCarlson School of ManagementUniversity of Minnesota321 19th Ave. South, Room 3-122Minneapolis, MN 55455612-624-1391 (v)[email protected]://www.tc.um.edu/~paren010