Consumer-Directed Health Plans: Health Status, Spending, and Utilization of Enrollees in Plans Based on Health Reimbursement Arrangements
Published: 2010-07-16T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Consumer-directed health plans (CDHP) combine a high-deductible health plan with a tax-advantaged account, such as a health reimbursement arrangement (HRA), that enrollees can use to pay for health care expenses. In an effort to restrain cost growth, several employers, including the federal government through its Office of Personnel Management (OPM), have offered HRAs for several years. For enrollees in HRAs compared with those in traditional plans such as preferred provider organization (PPO) plans, GAO assessed (1) differences in health status, and (2) changes in spending and utilization of health care services. GAO analyzed data from two large employers--one public and one private--that introduced an HRA option in 2003. GAO compared changes in health spending and utilization before and after 2003 for enrollees who switched from a PPO into an HRA (the HRA group) with those who stayed in a PPO (the PPO group). At the time GAO made its data requests to each employer, 2007 data from the public employer and 2005 data from the private employer were the most current and complete data available. GAO also reviewed published studies that included an assessment of the health status, spending, or utilization of HRA and other CDHP enrollees compared with traditional plan enrollees. Results are not generalizable beyond the enrollees, health plans, and employers GAO reviewed and also cannot be compared between the public and private employers.
section_title: What GAO Found
paragraphs: On average, enrollees in the HRA groups of both employers GAO reviewed spent less and generally used fewer health care services before they switched into the HRA in 2003 than those who remained in the PPO, suggesting that the HRA groups were healthier. Average annual spending per enrollee for the public employer's HRA group was $1,505 lower than the PPO group for the 2-year period prior to switching. (Spending for the public employer was based on analysis of both medical and pharmacy claims.) Likewise, the private employer's HRA group spent $566 less per enrollee for the 2-year period prior to switching than the PPO group (we were not able to examine pharmacy claims for the private employer). Similarly, of the 21 studies GAO reviewed that assessed the health status of HRA and other CDHP enrollees, 18 found they were healthier than traditional plan enrollees based on utilization of health care services, self-reported health status, or the prevalence of certain diseases or disease indicators. Other demographic differences may also explain spending and utilization differences including that policyholders in the HRA group were younger than those in the PPO group. Spending and utilization for enrollees in HRAs generally increased by a smaller amount or decreased compared with those in traditional plans that GAO reviewed. (1) Public employer. From the 2-year period before switching--2001 to 2002--to the 5-year period after switching--2003 to 2007--average annual spending for the HRA group increased by $478 per enrollee compared with $879 for the PPO group. This smaller increase for the HRA group was partially driven by decreases in spending for prescription drugs. Additionally, average annual utilization of services per enrollee increased by a smaller amount or decreased for the HRA group compared with the PPO group for six out of eight services GAO reviewed. (2) Private employer. From the 2-year period before switching--2001 to 2002--to the 3-year period after switching--2003 to 2005--average annual spending for the HRA group increased by $152 per enrollee compared with $206 for the PPO group. This smaller increase for the HRA group was partially driven by smaller increases in spending for physician office visits and decreases in spending for emergency room services. Additionally, average annual utilization of services per enrollee increased by a smaller amount or decreased for the HRA group compared with the PPO group for four out of seven services GAO reviewed. Similarly, GAO's review of published studies found that seven out of eight students that examined spending and controlled for differences in health status or other characteristics reported lower spending among HRAs and other CDHP enrollees relative to traditional plans. OPM did not provide comments on the draft report. Representatives of the two employers whose health plans GAO reviewed did not comment on the draft report.

section_title: Letter
paragraphs: More employers—including the federal government—are offering  consumer-directed health plans (CDHP) in an effort to restrain health care  cost growth. CDHPs combine a high-deductible health plan with a tax- advantaged account that enrollees can use to pay for health care  expenses. One type of CDHP is based on a health reimbursement  arrangement (HRA), a tax-advantaged account that reimburses enrollees  for health care expenses. HRA-based plans typically have higher  deductibles and lower premiums than do traditional health insurance  plans—such as preferred provider organization (PPO) plans—and unused  account balances may carry over from year to year. HRAs are owned by  the employer, and only the employer may make contributions to them.  HRAs are typically not portable and may not be taken by the enrollees if  they leave their employer. Employers began offering CDHPs based on  HRAs in 2001.
Debate surrounding CDHPs has grown as more employers offer them to  their employees. Proponents contend that the plans can help restrain  health care spending, arguing that the high deductibles and ability to carry  over balances give enrollees an incentive to seek lower-cost health care  services and to obtain services only when necessary. Critics are concerned  that these plans may attract healthier enrollees who use fewer health care  services or may discourage enrollees from obtaining necessary care.
Many employers, including the federal government, now have several  years’ experience offering CDHPs, particularly the HRAs that were  introduced first. Given this experience and the potential role of CDHPs as  health care reforms are implemented, there is interest in the health status  of those selecting HRAs and how these plans affect enrollees’ health care  spending and utilization compared with traditional plans. For enrollees  who switched into an HRA compared with enrollees who stayed in a  traditional plan, we assessed (1) differences in health status and   (2) changes in spending and utilization of health care services. To do this,  we conducted an analysis of an HRA and a traditional health plan for two  large employers and supplemented our work with the results of several  published studies.
Two large employers. We obtained HRA and PPO plan enrollment and  claims data for plan years 2001 through 2007 for a large public employer  and for plan years 2001 through 2005 for a large private employer. Both  employers introduced an HRA as a health insurance option for employees  at the beginning of the 2003 plan year. For each employer, we defined a  group of HRA enrollees and a group of PPO enrollees by analyzing  enrollment data. The HRA group included policyholders who were  continuously enrolled in the PPO in the 2001 and 2002 plan years, switched  into the HRA in the 2003 plan year, and stayed in the HRA for the  remainder of our study periods. The PPO group included policyholders  who were continuously enrolled in the PPO from the 2001 plan year  through the remainder of our study periods. Additionally, all groups  included the covered dependents of policyholders. (See fig. 1.)
Published studies. We conducted a comprehensive review of studies  published from January 2003 through March 2009 that included an  assessment of the health status, spending, utilization, or other  demographic characteristics of HRA and other CDHP enrollees compared  with those in traditional plans. We identified 31 such studies, of which 18  focused exclusively on HRA enrollees, and 13 focused on both HRA and  other CDHP enrollees. Our review comprised peer-reviewed journal  articles, studies by insurance carriers or independent consultants, national  surveys, and government publications. For our review of health status, we  included studies that used self-reported health status, assessed the health  status or illness burden of plan enrollees based on diagnoses or disease  indicators, or examined utilization prior to enrolling in an HRA or other  CDHP. For our review of spending and utilization, we included only those  studies that addressed selection bias as part of the methodology to  account for differences between HRA and other CDHP enrollees and  traditional plan enrollees that may affect the use of health care services.
To assess differences in the health status of enrollees who switched into  an HRA compared with those who stayed in a traditional plan, we analyzed  HRA and PPO plan claims data for the two large employers we examined.  We compared spending and utilization for health care services between  the HRA and PPO groups for each employer before introduction of the  HRA in 2003. This design enabled us to observe the potential effect of  selection bias due to differences in health status or other characteristics  which we did not separately control for between the two groups. We also  summarized the findings of studies that compared health status and other  demographic characteristics of HRA and other CDHP enrollees with those  in traditional plans.
To assess changes in spending and utilization of health care services for  enrollees who switched into an HRA compared with those who stayed in a  traditional plan, we analyzed the changes in spending and utilization for  the HRA and PPO groups from the period before to the period after  introduction of the HRA in plan year 2003. We also summarized the  findings of studies that compared spending and utilization of HRA and  other CDHP enrollees with those in traditional plans.
The results of our analyses are not generalizable beyond the enrollees,  health plans, and employers included in our review. The results of our  employer analyses cannot be compared between the public and private  employers. In particular, the results of our spending and utilization  analyses from the two employers may be influenced by the benefit  design—such as the financial features—of the health plans we reviewed  and the sizes of the HRA and PPO groups in our study. Additionally,  because our analyses of the two employers reflected instances where  employees had a choice between an HRA and a PPO plan option, they do  not represent the experiences of employees who have HRAs as their only  plan option. We reviewed all data for soundness and consistency and  determined that they were sufficiently reliable for our purposes. We  conducted this performance audit predominantly in two phases from July  2007 through October 2008 and from September 2009 through July 2010 in  accordance with generally accepted government auditing standards. Those  standards require that we plan and perform the audit to obtain sufficient,  appropriate evidence to provide a reasonable basis for our findings and  conclusions based on our audit objectives. We believe that the evidence  obtained provides a reasonable basis for our findings and conclusions  based on our audit objectives. Appendix I provides more detail on our  methodology and the limitations of the data we report, and appendix II  describes the published studies that we reviewed. Appendix III provides  more information on the financial features of each of the two employers’  HRA and PPO plans that we reviewed.
subsections: section_title: Background
paragraphs: In the past several years, employers and insurance carriers have begun to  offer HRAs and other CDHPs, which are intended to reduce health care  spending. To achieve this goal, CDHPs combine a high-deductible health  plan with a tax-advantaged account to pay for health care expenses.  CDHP insurance carriers may also offer online tools to help enrollees  evaluate the cost and quality of health care services and providers. The  two most common types of CDHPs offered are those based on an HRA  beginning in 2001 and those that are eligible to be coupled with a health  savings account (HSA), which were offered beginning in 2004.
Several studies and surveys have attempted to quantify the individuals  enrolled in CDHPs and the employers that offer them. For example, one  study using national survey data estimates that about 5.5 million  employees were enrolled in CDHPs of which 2.2 million were enrolled in  HRAs and 3.2 million were enrolled in HSA-eligible plans as of 2008.  Furthermore, based on data from the Office of Personnel Management  (OPM)—the agency that administers the Federal Employees Health  Benefits Program (FEHBP)—about 57,000 of the nearly 8 million enrollees  in the FEHBP were enrolled in CDHPs in 2009. About 42,000 of these  FEHBP enrollees were in HRAs and about 15,000 were in HSA-eligible  plans. Another study using national survey data found that HRAs were  offered by 8 percent and HSA-eligible plans were offered by   14 percent of employers with 500 or more employees in 2008. CDHPs are  offered by employers as one of a number of plan options, such as PPOs,  health maintenance organizations, or other traditional plans.
Enrollees in HRAs pay premiums to access covered services. Coverage of  most services is subject to the deductible while other services, such as  preventive care services, may be exempted from the deductible.  Enrollees use their HRA account to pay for qualified medical expenses.  While account balances may accrue from year to year, the accounts are  typically not portable—that is, employees do not own the accounts and  cannot keep unspent funds if they change jobs. HRA accounts are  administered by the employer or an insurance carrier and only employers  may contribute to the accounts. Table 1 describes the key features of  HRAs.
HRA enrollees must keep track of funds in their accounts. If the funds are  exhausted before the deductible is met in a given year, enrollees are  responsible for paying for the difference out of pocket. After an enrollee  meets the deductible, the plan operates much like a traditional PPO plan.  That is, the plan generally pays for most of the cost of covered services  and the enrollee contributes a cost-sharing amount—which varies by  plan—until meeting the maximum out-of-pocket spending limit, at which  point the plan pays 100 percent of the cost of covered services. Any  unspent funds in an HRA account may be rolled over to the next year,  thereby reducing or eliminating the enrollee’s share of the deductible in  subsequent years. See figure 2 for a hypothetical HRA benefit design.
section_title: Data Suggest HRA Enrollees Were Healthier Than Traditional Plan Enrollees
paragraphs: On average, enrollees in the HRA groups of both employers we reviewed  spent less and generally used fewer health care services before they  switched into the HRA in 2003 than those who remained in the PPO,  suggesting that they were healthier. Average annual spending per enrollee  for the public employer’s HRA group was $1,505 lower than the PPO group  for the 2-year period prior to switching in 2003. Similarly, the private  employer’s HRA group spent $566 less per enrollee for the 2-year period  prior to switching than the PPO group. (See fig. 3.)
We also found that for each service type we reviewed, the HRA groups for  both employers spent less per enrollee than the PPO groups over the   2-year period prior to the switch. Most notably, we found that the public  employer’s HRA group spent $399 less than the PPO group on prescription  drugs and inpatient hospital services, and $289 less on physician office  services. The private employer’s HRA group spent $346 less for inpatient  hospital services and $110 less for outpatient services than the PPO  group. (See table 2.)
In addition, we found that utilization of services was also generally lower  for the HRA groups over the 2-year period before switching into the HRA  compared with the PPO groups. For example, at the public employer, the  average annual number of physician office visits for the HRA group was  about four visits per enrollee compared with about seven visits for the  PPO group. Additionally, the HRA group filled an average of about   4 prescriptions per enrollee per year compared with an average of about  10 prescriptions for the PPO group. Similarly, at the private employer, the  average annual number of physician office visits for the HRA group was  about three visits per enrollee for the HRA group compared with about  four visits for the PPO group. In addition, the average length of a hospital  stay for the private employer’s HRA group was about 2 days compared  with about 4 days for the PPO group. Overall, the average percentage of  enrollees who did not receive any medical services was higher for both  employers’ HRA groups relative to the PPO groups—about 21 percent  versus about 17 percent, respectively, for the public employer, and about  31 percent versus about 26 percent, respectively, for the private employer.  (See app. IV for more information on utilization by service type.)
Our review of published studies generally found that HRA and other CDHP  enrollees tend to be healthier than those enrolled in traditional plans.  Specifically, of the 21 studies that assessed health status of HRA and other  CDHP enrollees, 18 found that they were healthier than traditional plan  enrollees based on utilization of health care services, self-reported health  status, or the prevalence of certain diseases or disease indicators. For  example, one study found that HRA and other CDHP enrollees appeared to  be nearly 14 percent healthier than those enrolled in a traditional plan  based on certain clinical categories. In another study conducted by the  Kaiser Family Foundation, 64 percent of HRA and other CDHP enrollees  reported being in very good or excellent health, compared with 52 percent  of those enrolled in traditional plans, and were less likely to have certain  chronic conditions—23 percent versus 35 percent, respectively. We  reported in 2005 that a larger share of non-elderly enrollees in an HRA  offered by the FEHBP reported being in “excellent” or “very good” health  compared with enrollees in other traditional plans—73 percent versus 64  and 58 percent, respectively.
In addition to health status, other demographic differences between the  HRA and PPO groups may also explain differences in spending and  utilization prior to introduction of the HRA. For example, our analyses of  data from the two employers showed that policyholders who switched  into the HRA were about 3 years younger, and slightly more likely to be  male and elect single coverage in 2003 than those who remained in the  PPO plan. (See app. V for additional information on the demographics of  HRA and traditional plan enrollees.)
section_title: Spending and Utilization for Enrollees in HRAs Generally Increased by a Smaller Amount or Decreased Compared with Those in Traditional Plans
paragraphs: For the public and private employers we reviewed, health care spending  and utilization of health care services for the HRA groups generally  increased by a smaller amount or decreased compared with the PPO  groups, from the period before to the period after switching. Additionally,  the majority of the studies we reviewed that examined total or medical  spending and controlled for differences in health status or other  characteristics of enrollees reported lower spending among enrollees in  HRAs and other CDHPs relative to traditional plans.
subsections: section_title: Public Employer
paragraphs: At the public employer, average annual spending for the HRA group  increased by a smaller amount from the 2-year period before switching to  the 5-year period after switching compared with the PPO group.  Specifically, average annual spending for the HRA group increased by   $478 per enrollee compared with $879 for the PPO group. (See fig. 4.)
Although the average annual spending for the HRA group remained  consistently lower than the PPO group after introduction of the HRA, the  average annual percentage increase in spending from 2003 through 2007  was higher for the HRA group—10 percent versus 7 percent, respectively.  This higher average annual percentage increase for the HRA group was  likely influenced by the lower base of spending compared with the PPO  group. (See fig 5.)
At the specific service level, the public employers’ HRA group experienced  greater increases in spending for inpatient hospital, outpatient, physician  office, and emergency room services than the PPO group, but these  increases were offset by decreases in spending for prescription drugs and  other services from the 2-year period before switching to the 5-year period  after switching. For example, average annual spending for physician  office services for the HRA group increased by $159 per enrollee  compared with an increase of $120 per enrollee for the PPO group.  However, average annual spending for prescription drugs for the HRA  group decreased by $47 per enrollee compared with an increase of $263  per enrollee for the PPO group. (See table 3.)
In addition, we found that when compared with the PPO group, the  average annual utilization of services per enrollee for the HRA group  either increased by a smaller amount or decreased from the 2-year period  before switching to the 5-year period after switching for six out of eight  service types we reviewed. For example, the average annual number of  prescriptions filled decreased by less than one prescription per enrollee  for the HRA group compared with an increase of about four prescriptions  per enrollee for the PPO group. However, the average annual number of  preventive services increased by about one per enrollee for the HRA group  compared with less than one for the PPO group. (See app. IV for more  information on utilization by service type.)
section_title: Private Employer
paragraphs: For the HRA group, similar to the public employer, average annual  spending at the private employer increased by a smaller amount than for  the PPO group from the 2-year period before to the 3-year period after  switching. Specifically, average annual spending for the private employer’s  HRA group increased by $152 per enrollee compared with $206 for the  PPO group (we were not able to analyze pharmacy claims for this  employer). (See fig. 6.)
Moreover, average annual spending for the HRA group remained  consistently lower than for the PPO group after introduction of the HRA,  although spending fluctuated for both groups. The average annual rate of  spending for the HRA group decreased by 2 percent from 2003 through  2005, while the average annual rate of spending for the PPO group  remained about the same. (See fig 7.)
At the specific service level, the private employer’s HRA group  experienced greater increases in spending for inpatient hospital services  compared with the PPO group, but this increase was offset by a decrease  in spending for emergency room services as well as lower increases in  spending for outpatient, physician office, and other services from the   2-year period before switching to the 3-year period after switching. For  example, average annual spending for inpatient hospital services for the  HRA group increased by $82 per enrollee compared with an increase of  $23 per enrollee for the PPO group. However, the average annual spending  for emergency room services for the HRA group decreased by $28 per  enrollee compared with an increase of $20 per enrollee for the PPO group.  Additionally, the average annual spending for physician office services for  the HRA group increased by only $22 per enrollee compared with an  increase of $73 per enrollee for the PPO group. (See table 4.)
In addition, we found that when compared with the PPO group, the  average annual utilization of services per enrollee for the HRA group  either increased by a smaller amount or decreased from the 2-year period  before switching to the 3-year period after switching for four out of seven  service types we reviewed. For example, the average annual number of  preventive services increased slightly less for the HRA group compared  with the PPO group. For emergency room visits, the average annual  number of visits per enrollee slightly decreased for the HRA group while it  slightly increased for the PPO group. (See app. IV for more information on  utilization by service type.)
section_title: Published Studies
paragraphs: Consistent with our analysis of employer data, most published studies that  examined health care spending reported lower spending among enrollees  in HRAs and other CDHPs relative to traditional plans. Of the eight studies  in our review that examined total or medical spending and controlled for  differences in health status or other characteristics of enrollees, seven  found that HRAs and other CDHPs reduced spending relative to traditional  plans. For example, the cost of medical and pharmacy care for HRA and  other CDHP enrollees was more than 4 percent lower than that of those in  traditional plans after accounting for differences in illness burden. In  addition, of the six studies that reviewed spending for prescription drugs,  four reported that HRA and other CDHP enrollees spent less than did  traditional plan enrollees. For example, one study found that costs were  10 percent lower for HRA and other CDHPs than for traditional plans,  suggesting a higher use of generic drugs and mail order purchasing. The  one study that did not find savings in total spending through an HRA found  that it was 23 percent more expensive than the traditional plan by its third  year of existence. However, the study authors acknowledged that this  may be due to the plan design of the HRA, which provided 100 percent  coverage after enrollees paid a small share of the deductible.
When considering the results of the published studies that reviewed  spending, it is important to note that these studies assessed differences  over a short time period. Of the seven studies that found reduced  spending, five studies found lower rates over a 1- or 2-year period. For  example, three of the studies were published by Cigna HealthCare and  were each a 1-year update on the claims costs of their HRAs and other  CDHPs relative to their traditional plans. The study that did not find  lower spending reported that spending was higher among HRA enrollees  than among traditional plan enrollees over a 3-year period, by as much as  26 percent in a single year.
We also reviewed published studies that reported on differences in  utilization of health care services and generally found lower utilization  among HRA and other CDHP enrollees compared with traditional plan  enrollees for two of the five service types we reviewed. In particular, we  reviewed studies that reported on utilization of inpatient hospital  admissions, outpatient visits, emergency room visits, physician office  visits, and preventive services and whether they reported a lower, higher,  or no conclusive difference in utilization among HRA and other CDHP  enrollees compared with traditional plan enrollees. For example, three out  of four studies that assessed visits to the emergency room found a  decrease in emergency room utilization among HRA and other CDHP  enrollees relative to traditional plan enrollees. Eight studies assessed the  utilization of preventive services, and six found an increase among HRA  and other CDHP enrollees relative to traditional plan enrollees. This may  be due to the fact that most HRAs and other CDHPs exempt preventive  services from the deductible. (See app. IV for more information on the  results of our review of published studies on utilization by service type for  HRA and other CDHP enrollees compared with those in traditional plans.)
section_title: Agency and External Comments
paragraphs: We provided a draft of the report for review and comment to OPM because  of its role administering the health insurance program for federal  employees. We provided a draft of this report to representatives of the  public and private employers whose health plans we reviewed and to two  independent health policy researchers with experience studying CDHPs.  OPM did not comment on the draft report. One of the independent  researchers commented that the study made good use of employer data  sets and existing research, the methods were appropriate to the study  objectives, and the findings were consistent with the larger body of  research in this area. The researcher also raised several questions about  the implications of our findings that were beyond the scope of this study.  The remaining parties did not comment on the draft report.
As we agreed with your offices, unless you publicly announce the contents  of this report earlier, we plan no further distribution of it until 30 days  from the date of this report. At that time, we will send copies of this report  to the Director of OPM, appropriate congressional committees, and other  interested parties. The report will be available at no charge on the GAO  Web site at http://www.gao.gov.
If you or your staffs have questions about this report, please contact me at  (202) 512-7114 or at dickenj@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made key contributions to this report are  listed in appendix VI.
section_title: Appendix I: Scope and Methodology
paragraphs: For enrollees who switched into plans based on health reimbursement  arrangements (HRA) compared with enrollees who stayed in a traditional  plan, we assessed (1) differences in health status and (2) changes in  spending and utilization of health care services. We conducted this  performance audit predominantly in two phases from July 2007 through  October 2008 and from September 2009 through July 2010 in accordance  with generally accepted government auditing standards. Those standards  require that we plan and perform the audit to obtain sufficient, appropriate  evidence to provide a reasonable basis for our findings and conclusions  based on our audit objectives. We believe that the evidence obtained  provides a reasonable basis for our findings and conclusions based on our  audit objectives.
subsections: section_title: Data and Information Sources
paragraphs: To address our research objectives, we conducted an analysis of an HRA  and a traditional health plan for two large employers and supplemented  our work with the results of several published studies.
Two large employers. We obtained HRA and preferred provider  organization (PPO) plan enrollment and claims data for plan years 2001  through 2007 for a large public employer and for plan years 2001 through  2005 for a large private employer. We judgmentally selected these  employers because each:    offered an HRA as one of multiple plan options for at least 3 years;    offered traditional plans, including a PPO, for 2 years before and at  least 3 years after the HRA was implemented; and    did not switch insurance carriers or significantly change their HRA or  PPO plan features during the study period. (See app. III for financial  features of each employer’s HRA and PPO plans.)
Both employers introduced an HRA as a health insurance option for  employees at the beginning of the 2003 plan year. For each employer, we  defined a group of HRA enrollees and a group of PPO enrollees by  analyzing enrollment data. The HRA group included policyholders who  were continuously enrolled in the PPO in the 2001 and 2002 plan years,  switched into the HRA in the 2003 plan year, and stayed in the HRA for the  remainder of our study periods. The PPO group included policyholders  who were continuously enrolled in the PPO from the 2001 plan year  through the remainder of our study periods. Additionally, all groups  included the covered dependents of policyholders.
For the public employer, the total number of enrollees ranged from 967 to  1,013 in the HRA group and from 1.25 million to 1.62 million in the PPO  group over the study period. For the private employer, the number of  enrollees ranged from 570 to 584 in the HRA group and from 1,079 to 1,098  in the PPO group over the study period. Group sizes fluctuated from year  to year as enrollees who turned 65 years of age were removed from the  analysis and the number of dependents changed.
Published studies. We conducted a comprehensive review of studies  published from January 2003 through March 2009 that included an  assessment of the health status, spending, utilization, or other  demographic characteristics of HRA and other CDHP enrollees compared  with those in traditional plans. We identified 31 such studies, of which   18 focused exclusively on HRA enrollees, and 13 focused on both HRA and  other consumer-directed health plan (CDHP) enrollees in plans eligible to  be coupled with a health savings account (HSA). Our review comprised  peer-reviewed journal articles, studies by insurance carriers or  independent consultants, national surveys, and government publications.  For our review of health status, we included studies that used self- reported health status, assessed the health status or illness burden of plan  enrollees based on diagnoses or disease indicators, or examined utilization  prior to enrolling in an HRA. For our review of spending and utilization,  we included only those studies that addressed selection bias as part of the  methodology to account for differences between HRA and other CDHP  enrollees and traditional plan enrollees that may affect the use of health  care services. (See app. II for our methodology and a list of studies we  included in our review of published studies.)
section_title: Health Status of HRA and Traditional Plan Enrollees
paragraphs: To assess differences in the health status of enrollees who switched into  an HRA compared with those who stayed in a traditional plan, we analyzed  HRA and PPO plan claims data for the two large employers we  examined. We compared spending and utilization of health care services  between the HRA and PPO groups for each employer before introduction  of the HRA in plan year 2003. This design enabled us to observe the  potential effect of selection bias due to differences in health status or  other characteristics which we did not separately control for between the  two groups. We also summarized the findings of studies that compared  health status and other demographic characteristics of HRA and other  CDHP enrollees with those in traditional plans.
section_title: Spending and Utilization of HRA and Traditional Plan Enrollees
paragraphs: To assess changes in spending and utilization of health care services for  enrollees who switched into an HRA compared with those who stayed in a  traditional plan, we analyzed the change in spending and utilization of  health care services for the HRA and PPO groups from the period before  to the period after introduction of the HRA in plan year 2003. We also  summarized the findings of studies that compared spending and utilization  of HRA and other CDHP enrollees with those in traditional plans.
For all of our spending analyses, we included the portion paid by the  health plan and the portion paid by the enrollee in our calculations. We  examined total spending across all medical services and by the following  service types:    outpatient,    physician office,   emergency room, and    prescription drugs.
All spending results were expressed in 2007 dollars using the medical care  consumer price index to control for inflation.
Similar to our spending analyses, we examined utilization of the service  types listed above. In addition, we examined utilization by the following  service types and other measures:    nonpreventive diagnostic radiology procedures,    nonpreventive diagnostic pathology or laboratory procedures,    preventive care services,   length of stay for an inpatient hospital admission, and    percentage of enrollees with no medical claims.
section_title: Data Reliability and Limitations
paragraphs: We reviewed all data for soundness and consistency and determined that  they were sufficiently reliable for our purposes. We discussed our data  sources with knowledgeable officials from the health plans and employers  we reviewed. For the employer data, we also performed data reliability  checks to test the internal consistency and reliability of the data, including  removing outlier claims for each year, interviewing health plan officials  to understand their coding systems, and reviewing steps the plans took to  ensure their enrollment and claims data were complete and accurate. We  excluded claims that indicated a coordination of benefits between the  HRA or PPO plans and other insurers. Because we analyzed health  insurance claims from an HRA and a PPO plan for each of the two  employers we reviewed, variations may exist across the data systems used  by each plan in how they designate claims by service type. Further,  differences may exist in the negotiated rates that each plan pays providers  for services.
The results of our analyses are not generalizable beyond the enrollees,  health plans, and employers included in our review. The results of our  employer analyses cannot be compared between the public and private  employers. In particular, the results of our spending and utilization  analyses from the two employers may be influenced by the benefit design  of the health plans we reviewed and the sizes of the HRA and PPO groups  in our study. Additionally, because our analyses of the two employers  reflected instances where employees had a choice between an HRA and a  PPO plan option, they do not represent the experiences of employees who  have HRAs as their only plan option.
section_title: Appendix II: Review of Published Studies
paragraphs: We conducted a comprehensive review of published studies from January  2003 through March 2009 that included an assessment of the health status,  spending, utilization, or other demographic characteristics of HRA and  other CDHP enrollees compared with traditional plan enrollees. We  identified 31 such studies, of which 18 focused exclusively on HRA  enrollees, and 13 focused on both HRA and other CDHP enrollees in an  HSA-eligible plan. Our review comprised peer-reviewed journal articles,  studies by insurance carriers or independent consultants, national surveys,  and government publications.
For our review of health status, we included studies that used self- reported health status, assessed the health status or illness burden of plan  enrollees based on diagnoses or disease indicators, or examined utilization  prior to enrolling in an HRA or other CDHP. For our review of spending  and utilization, we included only those studies that addressed selection  bias as part of the methodology to account for differences between HRA  and other CDHP enrollees and traditional plan enrollees that may affect  the use of health care services. For example, these methodologies  included:    using a regression analysis to control for differences in demographic  characteristics between study and control groups;    weighting the data to adjust for differences in demographic  characteristics between groups; or  examining the change from a traditional plan to a full replacement  HRA, whereby all of the traditional plan enrollees migrated to the HRA.
Our review of spending by HRA and other CDHP enrollees compared with  traditional plan enrollees also included only those studies that included  both the employer and the employee portion of spending for a health care  service.
For our review of other demographic characteristics, we assessed the age,  gender, type of coverage (single or family), and salary of HRA and other  CDHP enrollees compared with traditional plan enrollees.
Table 5 identifies the 31 studies included in our review, and whether we  used each study to address health status, spending, utilization, or  otherwise describe demographic characteristics of enrollees.
section_title: Appendix III: Financial Features of the HRA and PPO Plans Offered at the Public and Private Employers
paragraphs: Table 6 below summarizes the financial features of the HRA and PPO  plans offered by the public and private employers we reviewed. The  financial features presented are for in-network services in plan year  2003—the first year HRAs were introduced by the employers.
section_title: Appendix IV: Utilization of Services for Enrollees in HRAs and Traditional Plans
paragraphs: Tables 7 and 8 compare utilization by service type for the HRA groups with  the PPO groups before and after introduction of the HRA for the public  and private employers we reviewed. Table 9 summarizes the findings of  studies we reviewed that included an assessment of the utilization of HRA  and other CDHP enrollees compared with those in traditional plans.
section_title: Appendix V: Demographics of Enrollees in HRAs and Traditional Plans
paragraphs: To understand demographic differences between HRA enrollees and  traditional plan enrollees, we relied on an analysis of enrollment data from  the two large employers we reviewed and compared our results to other  national data sources and published studies. Specifically, we examined the  age, gender, type of coverage (single or family), and salary of  policyholders in the HRA and PPO groups at the beginning of plan year  2003 when the HRAs were first offered by each employer. We also  analyzed these demographic characteristics using 2004 data from large  insurance carriers active in the HRA and PPO markets and summarized  the findings of studies included in our review that included a comparison  of the demographic characteristics of HRA and other CDHP enrollees with  those in traditional plans.
subsections: section_title: Demographic Characteristics of Policyholders in the Employer HRA and PPO Groups
paragraphs: Our analyses of enrollment data from the two large employers showed that  policyholders who switched into the HRA in 2003 were younger, more  likely to be male, and elect single coverage than those who remained in  the PPO plan. Specifically, we found that policyholders from both  employers’ HRA groups were on average 3 years younger than the PPO  group in 2003. The HRA groups from both employers also had a slightly  higher percentage—2 to 5 percentage points—of male enrollees than the  PPO group in 2003. (See tables 10 and 11.)
We also found that policyholders in the HRA group were more likely to  elect single coverage compared with policyholders in the PPO. While  family coverage represented the majority of enrollment in both plans  offered by the public employer, the percentage of policyholders with  single coverage was higher for the HRA group than for the PPO group—  40 percent versus 31 percent, respectively, in 2003. This difference was  more pronounced at the private employer, where 57 percent of  policyholders in the HRA group elected single coverage versus only   38 percent of policyholders in the PPO group in 2003. (See table 12.)
We also found that policyholders in the HRA group for the private  employer had higher average salaries compared with those in the PPO  group—$55,884 versus $51,762, respectively, in 2003. Data limitations  precluded us from assessing salary differences for the public employer.
section_title: Demographic Characteristics of HRA and Traditional Plan Enrollees
paragraphs: Unlike our findings that policyholders in the HRA groups were younger  and more likely to be male than those in the PPO groups for the two  employers we reviewed, our analysis of national insurance carrier data  and findings from published studies found mixed evidence on the age and  gender of HRA enrollees compared with traditional plan enrollees.  However, similar to the HRA and PPO groups we reviewed, our analysis of  national insurance carrier data and published studies found that HRA  enrollees were more likely to elect single coverage than traditional plan  enrollees. Additionally, our analysis of published studies found that HRA  and other CDHP enrollees have higher salaries than traditional plan  enrollees.
Our analysis of data from the national insurance carriers found that  enrollees in the HRAs were younger than those in PPO plans, but our  review of published studies produced mixed evidence on the ages of HRA  and other CDHP enrollees relative to traditional plan enrollees. Our  analysis of national carrier data found that HRA enrollees were on average  5 years younger than PPO enrollees in 2004. However, of the 23 studies  that reported on age, 7 found that HRA and other CDHP enrollees were  younger than those enrolled in traditional plans, 8 found them to be about  the same age, 5 found them to be older, and 3 found mixed results within  their study populations. For example, 1 study found that HRA and other  CDHP enrollees at one employer were about 5 years younger, on average,  than those in traditional plans, whereas at another employer such  enrollees were about the same age as those in traditional plans.
Our analysis of national insurance carrier data and findings from  published studies also found mixed evidence on the gender of HRA  enrollees compared with those in traditional plans. Our analysis of  insurance carrier data found a roughly equal distribution of males and  females in the HRA and PPO plans—49 versus 48 percent, respectively, in  2004. Similarly, of the 16 studies that assessed gender, 10 found that HRAs  and other CDHPs had a higher proportion of males than did traditional  plans, 1 found a higher proportion of women, and 5 found either no  difference or mixed results. For example, 1 study determined through a  survey of nearly 4,700 employees at a particular employer that 41 percent  of those who chose an HRA were male compared with 29 percent of those  who chose a traditional plan.
We also found that HRA enrollees were more likely to elect single  coverage than traditional plan enrollees. Data from the national insurance  carriers showed that 44 percent of HRA enrollees compared with 42  percent of PPO enrollees opted for single coverage in 2004. Similarly,   three of the five studies that reviewed coverage type among HRA and  other CDHP enrollees also found that they more often elected single  coverage than did those who enrolled in traditional plan types. For  example, one study of an employer’s benefits data found that 51 percent   of HRA enrollees had single coverage, compared with 37 percent of  traditional plan enrollees.
Finally, the published studies we reviewed consistently found that HRA  and other CDHP enrollees had higher salaries than did traditional plan  enrollees. Specifically, 14 of the 16 studies that reported on salary came  to that conclusion. For example, a case study of a large employer found  the average salary of HRA enrollees was $93,409, compared with $69,555  for PPO enrollees.
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: In addition to the contact named above, Randy DiRosa, Assistant Director;  Rashmi Agarwal; Laura Brogan; Martha Kelly; Suzanne Worth; and  Timothy Walker made key contributions to this report.
section_title: Related GAO Products
paragraphs: Health Savings Accounts: Participation Increased and Was More  Common among Individuals with Higher Incomes. GAO-08-474R.  Washington, D.C.: April 1, 2008.
Employer-Sponsored Health and Retirement Benefits: Efforts to Control  Employer Costs and the Implications for Workers. GAO-07-355.  Washington, D.C.: March 30, 2007.
Health Savings Accounts: Early Enrollee Experiences with Accounts and  Eligible Health Plans. GAO-06-1133T. Washington, D.C.: September 26,  2006.
Consumer-Directed Health Plans: Early Enrollee Experiences with  Health Savings Accounts and Eligible Health Plans. GAO-06-798.  Washington, D.C.: August 9, 2006.
Consumer-Directed Health Plans: Small but Growing Enrollment Fueled  by Rising Cost of Health Care Coverage. GAO-06-514. Washington, D.C.:  April 28, 2006.
Federal Employees Health Benefits Program: First-Year Experience with  High-Deductible Health Plans and Health Savings Accounts. GAO-06-271.  Washington, D.C.: January 31, 2006.
Federal Employees Health Benefits Program: Early Experience with a  Consumer-Directed Health Plan. GAO-06-143. Washington, D.C.:  November 21, 2005.