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Multiple studies have shown that high-deductible health plans lower spending levels, however, less is known about whether such plans have an effect on spending growth. We begin with a model of the relationship between levels of insurance coverage and both spending levels and spending growth, highlighting the role of new technology adoption in the latter. Next, we leverage cross-sectional variation in private deductibles across states (and over time) to estimate whether areas with relatively higher deductibles experience lower spending growth. We use publicly available data from the Centers for Medicare and Medicaid Services and the Agency for Healthcare Research and Quality from 2002-2016, a period during which deductibles among privately insured employees more than tripled in magnitude and real spending growth exceeded 40%. Consistent with prior empirical work, we find that current period spending growth is significantly lower in states with higher deductible levels but non-responsive to changes in such levels over time. We observe these relationships in models of both private and total spending (including that on behalf of publicly insured and uninsured individuals), suggestive of potential spillovers. Future work should explore the role of other plan benefit characteristics in explaining spending growth and mechanisms underlying any observed effects.

Zonder onderwerpscode: economie

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Research has shown that higher cost-sharing lowers health care spending levels but less is known about whether cost-sharing also affects spending growth. From 2002 to 2016, private insurance deductibles more than tripled in magnitude. We use data from the Centers for Medicare and Medicaid Services and the Agency for Healthcare Research and Quality to estimate whether areas with relatively higher deductibles experienced lower spending growth during this period. We leverage panel variation in private deductibles across states and over time and address the potential endogeneity of deductibles using instrumental variables. We find that spending growth is significantly lower in states with higher average deductibles and observe this relationship with regard to both private insurance benefits and total spending (including Medicare and Medicaid), suggestive of potential spillovers. We hypothesize that the impact on spending growth happens because deductibles affect the diffusion of costly new technology.

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The growth of health care spending has been a longstanding policy concern. Over the years, several innovations have been proposed to lower levels of health care spending; however, their impact has been limited and not sustained over time. Costly new technology, while often an improvement to existing care, has been identified as a principal driver of health care spending growth. Recent literature has shown that high deductible health plans (HDHP) can have an immediate impact on levels of health care spending, but their medium- and long-run effects on spending growth remain unknown. In this paper, we use multiple-employer-group claims data from a large national insurer to (i) study whether HDHPs reduce the growth in spending over four years compared to lower deductible alternatives; and (ii) explore the mechanisms behind any reductions in growth by looking at whether HDHPs reduce the use of low- vs. high-value treatments. We find that HDHPs have a limited effect on spending growth, with a statistically significant reduction observed only for prescription drugs. HDHPs are not associated with significantly lower growth in spending on highly cost-effective medicines in a sample of drugs but do reduce spending growth for less cost-effective drugs.