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A large Midwestern employer that adopted a high-deductible health plan with a health savings account (HSA) for all employees, replacing its traditional health plan, reduced its total health care spending by 25 percent in the first year or $527 per person in the aggregate. In the second year total spending was 8 percent lower than in the year before the organization substituted the HSA, according to a recent study by the nonprofit Employee Benefit Research Institute (EBRI).
The study analyzed claims data from the unnamed employer over a five-year period.
In particular, spending on prescription drugs (pharmacy) and laboratory services was lower by a significant percentage and remained lower for the four years after the organization adopted the HSA plan.
Among other findings noted in EBRI's July 2013 report,Health Care Spending after Adopting a Full-Replacement, High-Deductible Health Plan with a Health Savings Account: A Five-Year Study:
Health insurance coverage with high deductibles (generally in excess of $1,000 for singles and twice that for families) is associated with tax-advantaged savings-account options that can be used to cover out-of-pocket costs for health care services, including HSAs and health-reimbursement arrangements (HRAs). These are often referred to as consumer-directed health plans (CDHPs), and they are intended to encourage employees to make cost-conscious decisions when selecting health care services. To learn more, see the SHRM Online article "Consumer-Driven Decision: Weighing HSAs vs. HRAs."
Although this study represents one of the longest observation periods reported with a full-replacement CDHP (meaning it was the only type of health plan the employer offered) and is one of the few studies with a matched control group, EBRI noted that the findings cannot necessarily be applied to broader populations, since they are based on the experience of a single employer and the study focused on workers with continuous plan eligibility during the study period. However, the data indicate that companies can achieve substantial cost savings by adopting a full-replacement CDHP.
Employers have been using CDHPs for more than a decade, according to the report. In 2012, fully 22 percent of smaller employers, 36 percent of larger employers and 59 percent of jumbo employers offered some type of CDHP, and nearly 1 in 5 workers were enrolled in one. Those numbers are expected to grow in coming years.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
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