Price Shopping in Consumer-Directed Health Plans

Published in: Forum for Health Economics and Policy, v. 16, no. 1, Mar. 2013, p. 1-19

Posted on RAND.org on January 01, 2013

by Neeraj Sood, Zachary Wagner, Peter J. Huckfeldt, Amelia Haviland

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Research Question

  1. Do consumer-directed health plans (CDHPs) encourage consumers to price shop for services?

We use health insurance claims data from 63 large employers to estimate the extent of price shopping for nine common outpatient services in consumer-directed health plans (CDHPs) compared to traditional health plans. The main measures of price shopping include (1) the total price paid on the claim, (2) the share of claims from low- and high-cost providers, and (3) the savings from price shopping relative to choosing prices randomly. All analyses control for individual and zip code level demographics and plan characteristics. We also estimate differences in price shopping within CDHPs depending on expected health care costs and whether the service was bought before or after reaching the deductible. For eight out of nine services analyzed, prices paid by CDHP and traditional plan enrollees did not differ significantly; CDHP enrollees paid 2.3% less for office visits. Similarly, office visits was the only service where CDHP enrollment resulted in a significantly larger share of claims from low-cost providers and greater savings from price shopping relative to traditional plans. There was also no evidence that, within CDHP plans, consumers with lower expected medical expenses exhibited more price shopping or that consumers exhibited more price shopping before reaching the deductible.

Key Findings

CDHP prices for most common outpatient services are not significantly different from analogous prices in traditional health plans.

  • The exception is a modest effect on prices for office visits, suggesting that CDHPs may be giving consumers incentives to price shop for these services.

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