HDHP Linked with HSA Reduces Employer Spending

July 18, 2013 (PLANSPONSOR.com) – A study by the Employee Benefit Research Institute (EBRI) found a high-deductible health plan (HDHP) linked with a health savings account (HSA) reduced health care spending for employers.

The multi-year study looked at a large Midwestern employer that adopted an HDHP with an HSA for all its employees in place of its traditional health care offering. This architecture resulted in a reduction of 25% in health care spending for the plan during the first year, or $527 per person in the aggregate.

“Results showed that spending was reduced significantly in the inaugural year of the HSA plan in medical, pharmacy and total claims categories,” said Paul Fronstin, director of EBRI’s Health Education and Research program and co-author of the study. “Results also showed the cost savings continued over the succeeding three years, albeit at a slower pace.”

Findings from the study also included:

  • Each category of health spending experienced reductions in the first year of the HSA plan with the exception of spending on in-patient hospital stays. Spending on laboratory services and prescription drugs had the largest declines at 36% and 32%, respectively;
  • Only pharmacy and laboratory spending were lower throughout the entire four years after the HSA plan was adopted; and
  • Reductions in pharmacy spending were large and mostly sustained over the four years after the HSA was adopted. In the first year of the HSA, pharmacy spending reductions were 40% to 47% for individuals in all but the highest quintile of spending.

The full results of this study can be found online at www.ebri.org in the July issue of EBRI Issue Brief under the title “Health Care Spending After Adopting a Full-Replacement, High-Deductible Health Plan with a Health Savings Account: A Five-Year Study.”