For the first time, a credible analysis group has measured the impact of Health Savings Accounts on users and rates.
The influential American Academy of Actuaries just released a report concluding that U.S. employers will save money as they move rapidly into Consumer Directed Healthcare (CDH) accounts including HSAs and HRAs, but proof of long-term savings will depend on whether the industry can design the studies correctly.
The report concludes that HSAs and HRAs do not appear to have any worse adverse risk selection and impact on sick patients than existing plans do. Coming from health plan actuaries, that’s counted as an endorsement.
"This is very exciting," Roy Ramthun of HSA Consulting Services, LLC told CDMR. "Finally, the studies indicated that while the possibility for employer cost-shifting exists with CDH plans, (as it does with traditional plans) most employers are not doing so, and might even be reducing employee cost-sharing under certain circumstances."
The report Emerging Data on Consumer-Driven Health Plans analyzes all of the latest findings and market data from the four biggest CDH studies including Aetna, CIGNA, Reden Anders and Uniprise (both United), then draws dozens of conclusions that are generally favorable to HSAs and HRAs. "In summary, while there continues to be difficulty in establishing a consensus value for the cost-savings impact of CDH designs, there is much evidence that the plans do offer some degree of savings compared to traditional plan options over both the short- and longer-term time horizons."
The observations of this monograph are organized around four main questions that are frequently raised regarding CDH plans:
Do CDH designs result in any first-year cost savings and/or favorable effects on cost trends beyond the first year?
Are the apparently positive results presented by market participants real or the result of favorable selection?
Are cost savings generated at the expense of necessary care or the result of delayed or inappropriate avoidance of care?
Are CDH plans merely a device for employers to shift more of the total benefit cost to employees?
With regard to first-year cost savings, all studies showed a favorable effect on cost in the first year of a CDH plan. CDH plan trends ranged from -4 percent to -15 percent. Coupled with a control population on traditional plans that experienced trends of +8 percent to +9 percent, the total savings generated could be as much as 12 percent to 20 percent in the first year. All studies used some variation of normalization or control groups to account for selection bias.
For savings after the first year, at least two of the studies indicate trend rates lower than traditional PPO plans by approximately 3 percent to 5 percent. If these lower trends can be further validated, it will represent a substantial cost-reduction strategy for employers and employees.
Generally, all of the studies indicated that cost savings did not result from avoidance of inappropriate care and that necessary care was received in equal or greater degrees relative to traditional plans. All of the studies reviewed reported a significant increase in preventive services for CDH participants. Three of the studies found that CDH plan participants received recommended care for chronic conditions at the same or higher level than traditional (non-CDH) plan participants. Two studies reported a higher incidence of physicians following evidence-based care protocols.
Finally, the studies indicated that while the possibility for employer cost-shifting exists with CDH plans, (as it does with traditional plans) most employers are not doing so, and might even be reducing employee cost-sharing under certain circumstances.