Evaluation of Defined Contribution Plans on Health Insurance Choice and Medical Care Use

Consumer-driven health plans (CDHPs) have emerged as a genuine new form of health insurance in the United States. The goal of this research was to provide early evidence of the factors affecting the choice of individuals into a defined contribution or consumer-driven health plan as well as the impact of the plans on employee cost and utilization for a set of regional and national employers. As part of this research, the researchers developed, fielded and analyzed (in 2003 and in 2004) an approximately 1,000 person survey of University of Minnesota employees on factors affecting their health plan choice as well as their overall satisfaction with their health plans where a consumer-directed health plan was one of the choices. They also integrated claims and survey data using a new trusted third party process to conform to HIPAA standards to collect identifiable data from health plans and employers. They obtained claims data for 5 of the 6 employers in our study population representing nearly 140,000 covered lives. The researchers completed a series of qualitative interviews with all six employers and their health plans. The results from this research were published in a series of journal articles. An article on plan choice published in Health Services Research in 2004 showed that CDHPs did not attract a significantly healthier risk pool. Another article, using just claims data, showed somewhat favorable selection associated with the CDHP, but the CDHP population quickly proved to be higher utilizers, despite their initial behavior before selecting the CDHP. A second article on the cost and utilization published in the same 2004 Health Services Research volume showed that CDHPs were less resource intensive than preferred provider organizations (PPO) and point-of-service (POS) plan designs, but hospital costs were shown, after risk adjustment, to rapidly increase. Subsequent analysis found the CDHP more expensive than the POS plan design, but less expensive than the PPO design in overall expenditure. A third article based on the first year of survey information from the University of Minnesota employee respondents was published in Health Services Research (2004) and found CDHP plan choosers were just as satisfied as other health plan enrollees and had little difference in satisfaction from other populations. Subsequent cost and utilization work with all six employers who participated in this study is expected to be completed by the end of the 2005 calendar year.