I hesitate to summarize this Milliman report, but believe it is a serious piece of work that needs wider distribution, so I have quoted the abstract below. The study “was based on six employer programs that offer their employees a choice of CDHPs (Consumer Driven Health Plans) or non-HDHPs (High Deductible Health Plans). These programs covered approximately 225,000 members with more than 30,000 enrolled in a CDHP. The actual CDHP penetration of the six employers ranged from 4.4% to 76%.”

“Do consumer-driven health plans (CDHPs) help reduce healthcare costs?

Many have opined on this issue but actual experience has been lacking. So Milliman, in partnership with the National Business Group on Health (NBGH), undertook the industry’s first independent, risk-adjusted study of six employers’ CDHPs.

The results show that CDHPs are creating savings for employers of 4.8%. After adjusting for induced utilization typically found in high-deductible plans, the additional savings amount to 1.5%. The more significant savings should not be dismissed, however, because induced utilization is a key component of the savings strategy inherent to consumer-driven health plans.

These results reinforce the need for better consumer information. Actual savings are likely to increase when people have the patient education resources they need to truly compare and shop for health care based on quality and cost.”

Here are the study’s findings:

“Overall, this study found that when adjustments are made for typical risk and benefit factors, CDHPs deliver cost savings that are modestly better than non-CDHPs. Specifically, these plans produce 1.5% in savings beyond non-CDHPs. This contrasts with the more dramatic savings that CDHPs appear to bring if certain adjustments are not taken into account.

“Key findings from our study include:
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“CDHPs are performing as predicted. CDHPs behave as expected by traditional actuarial analysis, which should alleviate some of the concerns about their adoption.
ƒƒ Health plan paid claims per member per month (PMPM) are very low for CDHP populations. Most HDHPs, however, come with high deductibles, which pay out less in claims and increase member cost sharing, which makes health plan paid claims not particularly meaningful as a measure of savings.
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“Allowed claims PMPM for the CDHP population are also low. Allowed claims are the total that the plan and the member pay to providers. For the plans we examined, CDHPs’ allowed claims were about 1% lower than allowed claims in the non-CDHP plans. Allowed claims were consistently lower across each CDHP, with reductions in claims ranging from 27% to 48%. However, this reduction does not yet account for various risk factors of people choosing CDHPs, as discussed below.
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“The risk profile of the population choosing CDHPs is younger and healthier. After adjusting for characteristics of the two populations that correlate with claim cost—risk, age, gender, and geography—CDHP allowed claims are about 4.8% lower than they are for the non-CDHPs. CDHP results also reflect the utilization impact of high-deductible plans. Higher cost sharing discourages utilization, and adjusting for this brings the savings to 1.5%. After all these adjustments, CDHP allowed claims are only slightly better than would be predicted by typical risk- and benefit-design factors.”

“CDHP results also reflect the utilization impact of high-deductible plans. Higher cost sharing discourages utilization, and adjusting for this brings the savings to 1.5%. After all these adjustments, CDHP allowed claims are only slightly better than would be predicted by typical risk- and benefit-design factors.”

My only editorial comment on this study is that it is important to note that even the New York Times reported that utilization reduction does not mean an adverse health outcome: “research ’suggests that about 20 percent of Medicare spending could be eliminated with no adverse effects on health,’ said Prof. David M. Cutler of Harvard, an adviser to the Obama campaign.”