Address correspondence to Stephen T. Parente, Ph.D., Carlson School of Management, Department of Healthcare Management, University of Minnesota, 321 19th Avenue South, Suite 3-149, Minneapolis, MN 55455. Roger Feldman, Ph.D., is with the School of Public Health, University of Minnesota, Health Services Research and Policy, Minneapolis. Jon B. Christianson, Ph.D., is with the Carlson School of Management, Department of Healthcare Management, University of Minnesota.
Evaluation of the Effect of a Consumer-Driven Health Plan on Medical Care Expenditures and Utilization
Article first published online: 28 JUN 2004
Health Services Research
Volume 39, Issue 4p2, pages 1189–1210, August 2004
How to Cite
Parente, S. T., Feldman, R. and Christianson, J. B. (2004), Evaluation of the Effect of a Consumer-Driven Health Plan on Medical Care Expenditures and Utilization. Health Services Research, 39: 1189–1210. doi: 10.1111/j.1475-6773.2004.00282.x
This article was originally a working paper presented at a conference on “Consumer-Driven Health Care: Evidence from the Field,” Washington, DC, September 15, 2003.
This project received financial support from The Robert Wood Johnson Foundation's initiative on Changes in Health Care Financing and Organization.
- Issue published online: 28 JUN 2004
- Article first published online: 28 JUN 2004
- Health insurance;
- consumer-driven health plans;
- administrative data;
- managed care
Objective. To compare medical care costs and utilization in a consumer-driven health plan (CDHP) to other health insurance plans.
Study Design. We examine claims and employee demographic data from one large employer that adopted a CDHP in 2001. A quasi-experimental pre–post design is used to assign employees to three cohorts: (1) enrolled in a health maintenance organization (HMO) from 2000 to 2002, (2) enrolled in a preferred provider organization (PPO) from 2000 to 2002, or (3) enrolled in a CDHP in 2001 and 2002, after previously enrolling in either an HMO or PPO in 2000. Using this approach we estimate a difference-in-difference regression model for expenditure and utilization measures to identify the impact of CDHP.
Principal Findings. By 2002, the CDHP cohort experienced lower total expenditures than the PPO cohort but higher expenditures than the HMO cohort. Physician visits and pharmaceutical use and costs were lower in the CDHP cohort compared to the other groups. Hospital costs and admission rates for CDHP enrollees, as well as total physician expenditures, were significantly higher than for enrollees in the HMO and PPO plans.
Conclusions. An early evaluation of CDHP expenditures and utilization reveals that the new health plan is a viable alternative to existing health plan designs. Enrollees in the CDHP have lower total expenditures than PPO enrollees, but higher utilization of resource-intensive hospital admissions after an initially favorable selection.