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Gary Claxton, Jon Gabel, Isadora Gil, Jeremy Pickreign, Heidi Whitmore, Benjamin Finder, Bianca DiJulio, and Samantha Hawkins Health Benefits In 2006: Premium Increases Moderate, Enrollment In Consumer-Directed Health Plans Remains Modest Health Affairs, November/December 2006; 25(6): w476-w485. [Abstract] [Full Text] [Figures Only] [PDF] [Reprints & Permissions]

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Enrollment Choice for High-Deductible Health Plans with Savings Options

Bradford Kirkman-Liff   ( 26 September 2006 )

Re: Enrollment Choice for High-Deductible Health Plans with Savings Options

William Boyles   ( 6 October 2006 )

Enrollment Choice for High-Deductible Health Plans with Savings Options 26 September 2006
Bradford Kirkman-Liff, Professor of Health Policy and Biotechnology W. P. Carey School of Business, Arizona State University Send comment to journal: Re: Enrollment Choice for High-Deductible Health Plans with Savings Options bradford.kirkman.liff{at}asu.edu Bradford Kirkman-Liff	The paper by Claxton et al. provides critical unbiased data on the growth of consumer-directed health plans. Advocates of high-deductible health plans and HSAs argue that competition and price transparency will promote cost containment and quality improvement. As advocates of competition and choice, it would seem that they would not support the mandatory enrollment of employes in HDHPs and HSAs, but allow them the choice of being in an HMO or a HDHP/HSA program. While this issue was not reported in their article, it was briefly mentioned in the full report on the Kaiser Family Foundation Web site, http://www.kff.org/insurance/7527/sections/ehbs06-sec8-1.cfm: "Forty percent of workers covered by a HDHP/SO are in firms where 100% of covered workers in the firm are enrolled in the HDHP/SO. When firms offer an HDHP/SO and at least one other plan type, an average of 19% of covered workers in those firms are enrolled in the HDHP/SO." This is a very interesting finding. About 8,500,000 workers were offered a choice of an HDHP/SO and another form of coverage, and only 1,620,000 chose HDHP/SO, while some 1,080,000 were mandated to enroll in HDHP/SO. In has been acceptable to mandate that Medicaid patients must enroll in managed care plans. Now it appears that employers can eliminate choice of plans and mandate enrollment in HDHP/SO coverage. Is it not surprising that some patient advocates worry that tradtional Medicare will be eliminated and Medicare recipients will be given the choice of Medicare Advantage HMO-like plans or HDHP/SO plans? Tracking future availability of choice of HDHP/SO plans or the use of HDHP/SO plans as the only offered plan by some employers will be an important issue in the next four years. Assessing labor union, employee, and general public reaction to a reduction in plan choices will also be an important issue as the employer-based health insurance system continues to unravel.
Re: Enrollment Choice for High-Deductible Health Plans with Savings Options 6 October 2006
William Boyles, Publisher Consumer Driven Market Report Send comment to journal: Re: Re: Enrollment Choice for High-Deductible Health Plans with Savings Options consumerdriven{at}starpower.net William Boyles	HSAs today are predominantly small-group-market products that are heavily skewed to total replacement. HRAs by contrast are almost always large firms offering multiple products. The 40% of employees in total replacement HDHP-SOs number probably applies more to HSAs, while the 19% with a choice applies more to HRAs -- a much bigger denominator. We were actually surprised that the total replacement percentage was so low because such a large percentage of small employers moving to HSAs already have total replacement products in place. Several studies have documented this recently. I question a statement in a recent response to the study that “Advocates of high-deductible health plans and HSAs argue that competition and price transparency will promote cost containment and quality improvement.” Another criticism in the response is that this same group of people are “advocates of competition and choice.” These are very different policy goals. HDHP/SOs in fact promote a “defined contribution” model akin to the Enthoven-FEHBP approach, where the employer makes a defined contribution (an HDHP) and lets consumers select products below the “HDHP contribution.” If HDHPs were actually to become prevalent in the market over the next decade or more, they would probably become much more of a commodity because they are catastrophic coverage. The market competition would then be below the defined-contribution HDHP where there are hundreds of vendors. Total replacement is not necessarily anti-market in this scenario because it is a wholesale, not a retail market. Finally, advocates of HSAs often publicly abhor the arrival of high-deductible plans not funded by the employer, and I do not know of anybody who advocates high deductibles. But it does seem clear that HDHPs will move the market structure in the direction of the FEHBP model using a true defined contribution instead of percentage of premium. Offering Medicaid recipients or privately insured patients a choice of identical products under today’s structure is not market competition. HDHPs may stimulate price competition for a more narrow catastrophic product, while dramatically increasing retail price competition below the deductible using cash, HSAs, HRAs, FSAs, debit cards, lines of credit, or future products. That is much closer to a classic microeconomic model of consumer markets.