Impact of benefit design on cost, use, and health: Literature review
Many employers use cost-sharing in their health insurance benefit designs as a means to reduce costs and, for some designs, encourage improved enrollee health behaviors. This paper summarizes the literature on the impact that three commonly used benefit designs have on cost, use of services, and health status:
- High-deductible health plans, which include consumer-directed health plans;
- Value-based insurance design; and
- Tiered pharmaceutical benefits
Overall, the research concludes that increased cost-sharing can significantly reduce costs for employers—often at the expense of increasing out-of-pocket costs for enrollees—but has not shown an adverse effect on health for the average enrollee. However, across-the-board cost-sharing reduces the use of both highly effective and less effective treatments and has been shown to adversely affect those who are sicker and have lower incomes. A more nuanced approach to cost-sharing benefit designs through value-based insurance design can improve adherence to evidence-based treatment, though the long-term impact on cost and health is inconclusive.
Some overarching conclusions emerge from the literature. These are:
- HDHPs reduce costs but they present problems for low-income people and/or those who have chronic conditions. Those problems can be mitigated by an adequately funded HSA/HRA and better education about preventive cost-sharing exemptions.
- V-BID can improve medication adherence, but there has not been much research to show that it can have a positive impact on health status and cost savings. Additionally, there is considerable administrative and political complexity for groups that want to move in the direction of increasing cost-sharing for low-value procedures, which could help offset costs.
- Tiered pharmaceutical benefit designs reduce costs without significantly adversely affecting the use of health services, but medication adherence rates may decrease for important medications if a generic option is not available or copayments increase across all tiers.
With regard to both HDHPs and tiered pharmaceutical benefit designs, health plans and purchasers may want to take a V-BID approach to reduce some of the negative outcomes seen in these plans. Specifically, while the ACA requires coverage of preventive services with no cost-sharing, purchasers could consider reducing or eliminating cost-sharing for other evidence-based, high-value services within HDHPs. Similarly, health plans/purchasers may want to con