Federal HDHP's May Attract Small Demographic Group

February 2, 2006 (PLANSPONSOR.com) - The federal government's first offering of high deductible health plans (HDHP) with a health savings account (HSA) may not have equally attracted federal workers in all demographic groups, a study has concluded.

In a report released Thursday by the Government Accountability Office (GAO), GAO researchers pointed out that first-year HDHP enrollees had consistently higher incomes across all age groups than enrollees of another new plan and all Federal Employee Health Benefits Program (FEHBP) enrollees.

The GAO said that fact may indicate that certain aspects of HDHP’s – a greater financial exposure along with potential tax advantages – “uniquely attract higher-income individuals with the means to pay higher deductibles and the desire to accrue tax-free savings.”

First-year federal workers were also younger on average than all FEHBP enrollees, but not younger than those federal workers opting for another new health plan. Concluded the GAO: “Thus it is not clear whether younger individuals were uniquely attracted to HDHPs, or if younger enrollees are typical of recently introduced health plans in general.” The GAO said more experience is needed with the programs before drawing conclusions about their user trends.

Tracking demographic trends in HDHPs are important because naysayers have charged that primarily the young, the healthy and the more affluent workers will migrate toward the programs.

A Modest Beginning

In general, the GAO found, while first-year enrollment was modest, the number of carriers offering these products in 2005 and expected to offer them in 2006 indicates that the federal Office of Personnel Management (OPM) and health insurance carriers anticipate enough workers will choose the plans in coming years.

GAO investigators also looked at the experience with providing workers additional information about their health conditions and the available treatments – a cornerstone of the consumer driven health plan movement. They found that the extent to which that information was made available was varied and limited, and HDHP enrollees were not provided any more or different information than was provided to traditional plan enrollees.

Most notably lacking, the GAO asserted, was specific information to assess the quality of health care provided by particular physicians and the actual prices plans had negotiated with particular providers.

Information Projects Underway

Two of the three largest HDHPs were developing physician-specific patient satisfaction ratings to help enrollees assess physician quality, and one had initiated a pilot project to provide enrollees with the negotiated prices they would pay for certain services performed by a particular provider. “Until such provider-specific quality and cost data become more widely available, the CDHP goal of having enrollees make health care purchase decisions based on an informed assessment of the quality/cost trade-offs may not be fully realized, ” the GAO commented.

The three largest federal HDHPs generally had similar service lineups – including preventive services – as their traditional plan counterparts; however, enrollees’ financial responsibilities usually differed.

In commenting on a draft of this report, OPM said that it would monitor enrollment trends over time to assess whether certain individuals- such as younger or healthier individuals –
disproportionately enroll in HDHPs. OPM also said it would continue to encourage plans to expand the decision support information they provide to enrollees, including the pricing of health care services.