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Enrollee Incentives in Consumer Directed Health Plans: Spend Now or Save for Later?

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  • Feldman Roger D

    (University of Minnesota, Twin Cities)

  • Parente Stephen T

    (University of Minnesota)

Abstract

We propose a model of enrollee incentives in consumer directed health plans (CDHPs) and estimate the model with data from a large employer that offered a CDHP in addition to two traditional health insurance plans. In the CDHP a portion of the enrollee's pretax compensation is placed in an account that can be used to pay for out-of-pocket medical expenses or rolled over to the next year. In a multi-period model, healthy employees should save part of the account to pay for future medical contingencies. We measured health status by the employee's predicted medical spending in the year prior to the CDHP offering. We found that healthy CDHP enrollees tended to spend less in three post-enrollment years than a comparison group of healthy employees who elected to keep their traditional health insurance coverage. However, CDHP enrollees with high predicted spending--a measure of poorer health--spent more than their comparison group of traditional health insurance enrollees in the following three years.

Suggested Citation

  • Feldman Roger D & Parente Stephen T, 2010. "Enrollee Incentives in Consumer Directed Health Plans: Spend Now or Save for Later?," Forum for Health Economics & Policy, De Gruyter, vol. 13(2), pages 1-20, April.
    • Handle: RePEc:bpj:fhecpo:v:13:y:2010:i:2:n:3
    DOI: 10.2202/1558-9544.1182
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    References listed on IDEAS

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    1. Cardon, James H. & Showalter, Mark H., 2001. "An examination of flexible spending accounts," Journal of Health Economics, Elsevier, vol. 20(6), pages 935-954, November.
    2. Keeler, Emmett B & Newhouse, Joseph P & Phelps, C E, 1977. "Deductibles and the Demand for Medical Care Services: The Theory of a Consumer Facing a Variable Price Schedule under Uncertainty," Econometrica, Econometric Society, vol. 45(3), pages 641-655, April.
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    Cited by:

    1. Haviland Amelia M & Sood Neeraj & McDevitt Roland & Marquis M Susan, 2011. "How Do Consumer-Directed Health Plans Affect Vulnerable Populations?," Forum for Health Economics & Policy, De Gruyter, vol. 14(1), pages 1-25, April.
    2. Deborah Peikes & Stacy Dale & Eric Lundquist & Janice Genevro & David Meyers, 2011. "Building the Evidence Base for the Medical Home: What Sample and Sample Size Do Studies Need?," Mathematica Policy Research Reports 5814eb8219b24982af7f7536c, Mathematica Policy Research.
    3. Hao Yu, 2017. "China’s medical savings accounts: an analysis of the price elasticity of demand for health care," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(6), pages 773-785, July.
    4. repec:mpr:mprres:7219 is not listed on IDEAS
    5. Sood Neeraj & Wagner Zachary & Huckfeldt Peter & Haviland Amelia M., 2013. "Price Shopping in Consumer-Directed Health Plans," Forum for Health Economics & Policy, De Gruyter, vol. 16(1), pages 35-53, March.
    6. Bryan Dowd & Roger Feldman, 2012. "Competition and Health Plan Choice," Chapters, in: Andrew M. Jones (ed.), The Elgar Companion to Health Economics, Second Edition, chapter 13, Edward Elgar Publishing.

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