What Do Health Insurance Deductibles Do to Health Care Spending Growth and its Efficiency?

43 Pages Posted: 14 Dec 2021

See all articles by Claudio Lucarelli

Claudio Lucarelli

University of Pennsylvania

Molly Frean

University of Pennsylvania - The Wharton School

Aliza Gordon

HealthCore, Inc.

Lynn Hua

University of Pennsylvania

Mark V. Pauly

University of Pennsylvania - Health Care Systems Department; National Bureau of Economic Research (NBER)

Abstract

Costly new technology, while often beneficial, has been identified as the principal driver of healthcare spending growth. Recent literature has shown high deductible health plans (HDHP) can have an immediate impact on levels of healthcare spending, but their medium and long run effects on spending growth remain unknown. Analyzing a panel of multiple-employer-group claims data from a national insurer, we find HDHPs have a limited effect on total spending growth, with a statistically significant reduction observed only in the first-year post-switch from a LDHP to a HDHP plan. HDHPs do, however, reduce spending growth over time for prescription drugs, lowering growth for less cost-effective drugs but not affecting growth in spending on highly cost-effective medicines.

Keywords: Health Insurance, High Deductibles, Spending Growth

Suggested Citation

Lucarelli, Claudio and Frean, Molly and Gordon, Aliza and Hua, Lynn and Pauly, Mark V., What Do Health Insurance Deductibles Do to Health Care Spending Growth and its Efficiency?. Available at SSRN: https://ssrn.com/abstract=3985356 or http://dx.doi.org/10.2139/ssrn.3985356

Claudio Lucarelli (Contact Author)

University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

Molly Frean

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Aliza Gordon

HealthCore, Inc.

800 Delaware Avenue
Fifth Floor
Wilmington, DE 19801
United States

Lynn Hua

University of Pennsylvania

Philadelphia, PA 19104
United States

Mark V. Pauly

University of Pennsylvania - Health Care Systems Department ( email )

3641 Locust Walk
208 Colonial Penn Center
Philadelphia, PA 19104-6358
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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