New Study Shows Lower Costs in Account-Based Health Plans: HSAs & HRAs

It is great to see another study that confirms that market forces combined with transparency in pricing and quality measures can produce lower prices and better quality — just as they have in every other industry where they have been applied.

On Tuesday, HealthPartners, the largest consumer-governed, nonprofit health care organization in the nation confirmed the findings of reported last week by CIGNA that Consumer-Driven Health Care is effective in lowering medical costs and better engaging consumers to seek out more cost effective care.

A press release issued by the health plan stated that the analysis showed that even when adjusted for illness burden, health care costs were 4.4 percent lower for HealthPartners members in these consumer directed health plans compared to members in traditional plans. Researchers found the lower costs were driven by CDHP members receiving care from lower cost providers and that providers used fewer resources such as diagnostic imaging and other procedures.

Proponents of consumer-driven health care have long argued that given incentives and proper tools, persons will take an active role in making health care purchasing decisions just as they do with purchases of other goods and services. The HeathPartners study bears out this theory in that researchers also found that members with CDHPs were more likely to use Web-based tools that provide information on health care costs and quality. The study found members with consumer-directed plans were twice as likely to access HealthPartners Medical Cost Calculator which has cost information for 93 high frequency procedures or conditions from ear infection to coronary artery bypass surgery.

Finally, the study, that examined the experience of members in both HRAs and HSAs*, provided evidence that members, including those with chronic illness, are getting care they need.

HealthPartners, based in Bloomington, MN, was founded in 1957 and has more than 640,000 members in Minnesota, western Wisconsin, North and South Dakota and Iowa.

*As defined by the report:

Health savings account (HSA). An account into which either or both the employer and the individual can make tax-free contributions up to an IRS defined annual maximum. Participants must be enrolled in a high deductible health plan (HDHP) to contribute to an HSA. Any money left over at the end of the calendar year is rolled over to the next year. Funds belong to the individual and are portable through employment changes.
Health Reimbursement Arrangements are set up by the employer for the employee’s benefit and are typically paired with a deductible health plan. Only employers can make contributions into an HRA. The account belongs to the employer and is not portable through employment changes. Employers may allow access to HRA funds for medical expenses post employment, but in typical plan designs funds revert back to the employer upon termination.

Read the study summary.

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