The Effects of Consumer-Directed Health Plans on Health Care Spending |
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| Authors: | Anthony T. Lo Sasso Lorens A. Helmchen Robert Kaestner |
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| Affiliation: | Anthony T. Lo Sasso and Lorens A. Helmchen are in the Division of Health Policy and Administration, School of Public Health, University of Illinois at Chicago and Institute of Government and Public Affairs, University of Illinois. Anthony T. Lo Sasso can be contacted via e-mail: . Robert Kaestner is in the Institute of Government and Public Affairs, University of Illinois and Department of Economics, University of Illinois at Chicago. We gratefully acknowledge numerous helpful suggestions from Tom Buchmueller, Roger Feldman, Scott Harrington, Will Manning, Steve Parente, and seminar participants at the American Economic Association annual meeting, the AcademyHealth annual research meeting, Rochester University, the Southeastern Health Economics Study Group, IUPUI, Lehigh University, Tulane University, University of Illinois at Chicago, University of Minnesota, and the National Economists Club in Washington DC. Expert research assistance was provided by Sara Borelli and Kevin Callison. |
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| Abstract: | We use unique data from an insurer that exclusively offers high-deductible, "consumer-directed" health plans to identify the effect of plan features, notably employer contributions to the spending account, on health care spending. Our results show that the marginal dollar contributed by the employer to the spending account is entirely spent on outpatient and pharmacy services. In contrast, out-of-pocket spending was not responsive to the amount the employer contributes to the spending account. Our results represent the first plausibly causal estimates of the components of consumer-driven health plans on health spending. The magnitudes of the effects suggest important health care spending consequences to higher employer contributions to spending accounts. Our findings are most directly relevant to health reimbursement arrangement plan designs, though our results are still of value to health savings account plan designs. |
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