Anthony T. Lo Sasso
University of Illinois at Chicago
Acknowledgments
Mona Shah
Nancy Hardie
Regina Levin
UnitedHealth Group
A (Very) Short History of Consumer
Directed Health Plans
 By the late 1990s it was becoming clear that the
managed care revolution was hitting a wall, both in the
form of a consumer backlash and health care providers
finding ways to improve their bargaining position
 Attention started to turn (back) to demand-side
incentives as a means of restraining health care
spending
A Lot of Interest in CDHP, But Still Relatively
Little Known
 CDHP has attracted considerable attention from
employers, government and individuals
 Enrollment in HRAs and HSAs has been growing
among those enrolled in employer sponsored plans as
well as the non-group market
 Most recent KFF/HRET survey found that 13% of
employers offered CDHPs in 2008 up from just 7% in
2006 and 8% of workers enrolled in such plans in 2008
up from 4% in 2006
 Of course Medicare Part D features a “donut hole”
benefit design
Still Big Unanswered Questions
 While we have learned quite a bit about how spending
is affected by CDHPs (go figure, the demand curve still
slopes down!), we know little about how the treatment
of particular diseases is affected:
 E.g., mental health care, diabetes, hypertension, and so
forth
 And of course we know very little about how health is
affected by such designs
 Likewise, we know little about benefits and health
literacy (or lack thereof) interact with consumerdriven designs.
Effects of Switching to a CDHP
 Using a cohort of individuals in firms who offered an HSA
for the first time in 2006, use pre/post data to compare
switchers to the HSA and stayers in traditional plans
 Switchers have a 2 percentage point drop in initiation into
treatment & reduction in spending conditional on any use of
10% compared to stayers
 Pattern of effects indicated that CDHPs affect decisions that
are (more) at the discretion of the consumer vs. the provider


HSAs generally affected the decision to initiate OP/IP treatment, but
conditional on initiating treatment we found only small differences
in spending
For pharmacy spending, we also observed decreases on the any use
margin and also decreases in spending conditional on use
But what about persons with
Chronic Conditions?
 In our study setting, 33% of individuals offered an HSA
enrolled
 Take-up among those with chronic conditions…?

30% (versus 35% among those without chronic conditions)
 How about effects of HSAs on service use between
chronic/non-chronic?
 Results suggest that persons with chronic conditions
have no change in their rate of initiation into care, but
conditional on use spend less
Concluding Thoughts
 Work to date has highlighted “first order” effects of the
benefits design on spending & utilization
 Results point to significant if relatively modest effects of
CDHP arrangements on spending
 But of course you can’t increase cost-sharing and expect
anything other than reduced spending
 The real question is whether it’s efficient (does the marginal
cost of the care forgone exceed the marginal benefit)
 We know relatively little on how individuals with chronic
conditions fair under CDHP designs
 But more work is needed…