Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Study finds consumers may have more control over health costs than previously thought

30.09.2011
The historic RAND Health Insurance Experiment found that patients had little or no control over their health care spending once they began to receive a physician's care, but a new study shows that this has changed for those enrolled in consumer-directed health plans.

Patients with health coverage that includes a high deductible and either a health savings account or a health reimbursement arrangement reduced their costs even after they initiated care.

Overall, the study found about two thirds of the reduction in total health care costs was from patients initiating care less often and the remaining third was from a reduction in costs after care is initiated. The findings were published online by the journal Forum for Health Economics and Policy.

"Unlike earlier time periods, it seems that today's consumers can have greater influence on the level and mix of medical services provided once they begin to receive medical care," said Amelia Haviland, the study's lead author and a senior statistician at the RAND Corporation, a nonprofit research organization. "We found that at least part of the savings in cost per episode reflects choices for less-costly treatments and products, not just a reduction in the number of services."

Researchers from RAND, Towers Watson and the University of Southern California examined the claims experience of many large employers in the United States to determine how consumer-directed health plans and other high-deductible plans can reduce health care costs. The study was funded by the California HealthCare Foundation and the Robert Wood Johnson Foundation.

According to Haviland, at least three factors influenced the cost of care once the patient had initiated care: lower use of name-brand medications, less in-patient care and lower use of specialists. Researchers speculate that patients may talk to their doctors about their higher deductibles and ask them to help keep costs low.

"It is not surprising that deductibles of $1,000 or more reduced health care consumption, but we found that savings occurred even when employers helped employees offset these out-of-pocket costs by making contributions to their accounts," said Roland McDevitt, a study co-author and director of health research at Towers Watson, a human resource and employee benefits consultancy. "This was true for both health savings accounts and health reimbursement arrangements."

Health reimbursement arrangements and health savings accounts create different incentives for employees. Health reimbursement arrangements allow employers to pay for qualified medical expenses, including those that fall under the deductible. These payments or reimbursements are excluded from the taxable income of the employee. Unused portions may roll over at the end of the year, but any account balance is owned by the employer and employees generally forfeit the account balance if they leave the employer before retirement.

Health savings accounts create a stronger incentive for employees to manage their health care costs, because the employee owns the account. This type of account was shown to have the largest impact on cost reductions. It can earn interest and it follows employees when they change jobs.

Health savings account contributions are only allowed for those enrolled in high-deductible health plans as defined by law, but account balances may be used for qualified medical expenses at any time. The minimum health savings account deductibles for 2011 are $1,200 for single coverage and $2,400 for family coverage.

The study found that both the level of the deductible and the level of the employer account contributions influence the extent of savings. Higher deductibles of $1,000 or more together with employer account contributions of less than half the deductible produced the greatest cost reductions.

"It is clear that high-deductible health plans with personal medical accounts produce overall health care cost savings and not simply a cost shift," said co-author Neeraj Sood, associate professor at the Schaeffer Center for Health Economics and Policy at USC and a RAND economist. "This is mostly due to patients initiating less care, but a full third of the reduction is due to shifts in the mix of care they are receiving."

The authors cautioned that there was some reduction in the rate of cancer screenings and childhood immunizations during the first year of enrollment in a high-deductible plan. They found this first-year effect was relatively small, but expressed concern about the early trend. They say more research is needed to determine the extent to which these cost reductions come at a price of forgoing necessary medical care.

RAND Health, a division of the RAND Corporation, is the nation's largest independent health policy research program, with a broad research portfolio that focuses on health care costs, quality and public health preparedness, among other topics.

Warren Robak | EurekAlert!
Further information:
http://www.rand.org

Further reports about: Economics Foundation health care health services medical care savings account

More articles from Studies and Analyses:

nachricht New study from the University of Halle: How climate change alters plant growth
12.01.2018 | Martin-Luther-Universität Halle-Wittenberg

nachricht Disarray in the brain
18.12.2017 | Universität zu Lübeck

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Scientists decipher key principle behind reaction of metalloenzymes

So-called pre-distorted states accelerate photochemical reactions too

What enables electrons to be transferred swiftly, for example during photosynthesis? An interdisciplinary team of researchers has worked out the details of how...

Im Focus: The first precise measurement of a single molecule's effective charge

For the first time, scientists have precisely measured the effective electrical charge of a single molecule in solution. This fundamental insight of an SNSF Professor could also pave the way for future medical diagnostics.

Electrical charge is one of the key properties that allows molecules to interact. Life itself depends on this phenomenon: many biological processes involve...

Im Focus: Paradigm shift in Paris: Encouraging an holistic view of laser machining

At the JEC World Composite Show in Paris in March 2018, the Fraunhofer Institute for Laser Technology ILT will be focusing on the latest trends and innovations in laser machining of composites. Among other things, researchers at the booth shared with the Aachen Center for Integrative Lightweight Production (AZL) will demonstrate how lasers can be used for joining, structuring, cutting and drilling composite materials.

No other industry has attracted as much public attention to composite materials as the automotive industry, which along with the aerospace industry is a driver...

Im Focus: Room-temperature multiferroic thin films and their properties

Scientists at Tokyo Institute of Technology (Tokyo Tech) and Tohoku University have developed high-quality GFO epitaxial films and systematically investigated their ferroelectric and ferromagnetic properties. They also demonstrated the room-temperature magnetocapacitance effects of these GFO thin films.

Multiferroic materials show magnetically driven ferroelectricity. They are attracting increasing attention because of their fascinating properties such as...

Im Focus: A thermometer for the oceans

Measurement of noble gases in Antarctic ice cores

The oceans are the largest global heat reservoir. As a result of man-made global warming, the temperature in the global climate system increases; around 90% of...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

10th International Symposium: “Advanced Battery Power – Kraftwerk Batterie” Münster, 10-11 April 2018

08.01.2018 | Event News

See, understand and experience the work of the future

11.12.2017 | Event News

Innovative strategies to tackle parasitic worms

08.12.2017 | Event News

 
Latest News

Morbid Obesity: Gastric Bypass and Sleeve Gastrectomy Are Comparable

17.01.2018 | Health and Medicine

Researchers identify new way to unmask melanoma cells to the immune system

17.01.2018 | Health and Medicine

Genetic discovery may help better identify children at risk for type 1 diabetes

17.01.2018 | Health and Medicine

VideoLinks
B2B-VideoLinks
More VideoLinks >>>