1) High deductible health plans are primarily attractive to consumers because they provide more flexibility and more choice. High deductibles mean lower premiums, and in fact, they can mean taking risks in order to get rewards. There are some people in the marketplace today who do not think they will ever need to use their health insurance. They want to have options just in case, but they are mostly healthy people who are not big consumers of health services. As a result of this combination, many would rather gamble and see what results they might generate. If they do not use their health spending, they can roll it over, or in some cases they can spend it on other things (with a tax penalty). These consumers are willing to make a bet on themselves and their good health in exchange for the possibility that they may have to pay a higher deductible. In addition, they may be people who have more liquid net worth, so they could be capable of paying high prices for their deductible in a situation where it was absolutely necessary.
2) Retrospective risk score may not be a good predictor for future spending. The extent to which people are sick is only one factor among many that will determine the extent to which they will spend on healthcare. There are cultural factors to consider, as well. Some people do not go to doctors regardless of what is going on with them. This does not just include those people who have strongly held religious beliefs, either. There are some people who do not have the time or who have a fear of doctors. There are some who simply engage in avoidance so they will not have to deal with a problem. Risk score may seem as if it would correlate to spending, but it does not necessarily do so. In short, healthcare consumers are not all that rational.

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3) With any study, it is difficult to get all of the potential factors that could have an impact. It can be hard to match and isolate in order to draw conclusion. In this case, the authors seem to have done a good job in finding those factors that are most important in driving spending. One might consider religious affiliation as well in order to have a better, more valid result, but it seems as if the study got it right in terms of matching factors for getting a reliable result.

4) One would expect an HRA account to have an effect on spending with lower elasticities of demand. After all, employers have to agree to pay these costs. Employers would seem to be more likely to agree to pay costs that would be less variable. If things were more variable, then employers would be on the hook for big costs they may not have anticipated. There does not appear to be a statistically significant correlation in the study, which may be surprising. The study does not support this assumption, which seems to be relatively standard in nature.

5) It is difficult to know the motivation of any person using their health plan. In addition, it could be because both of these factors play a role in how people behave in the marketplace. There is a moral hazard in play that drives people to use a product when there is no risk involved in doing so. At the same time, this always exists, so it is difficult to say that this is the certain motivation when a group of people could be motivated by a range of different concerns that are unrelated to the moral hazard effect.

  • Rowe, J. W., Brown-Stevenson, T., Downey, R. L., & Newhouse, J. P. (2008). The effect of consumer-directed health plans on the use of preventive and chronic illness services. Health Affairs, 27(1), 113-120.