NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Patient Responses to Incentives in Consumer-directed Health Plans: Evidence from Pharmaceuticals

Peter J. Huckfeldt, Amelia Haviland, Ateev Mehrotra, Zachary Wagner, Neeraj Sood

NBER Working Paper No. 20927
Issued in February 2015
NBER Program(s):   HC   HE

Prior studies suggest that consumer-directed health plans (CDHPs) -characterized by high deductibles and health care accounts- reduce health costs, but there is concern that enrollees indiscriminately reduce use of low-value services (e.g., unnecessary emergency department use) and high-value services (e.g., preventive care). We investigate how CDHP enrollees change use of pharmaceuticals for chronic diseases. We compare two large firms where nearly all employees were switched to CDHPs to firms with conventional health insurance plans. In the first firm’s CDHP, pharmaceuticals were subject to the deductible, while in the second firm pharmaceuticals were exempt. Employees in the first firm shifted the timing of drug purchases to periods with lower cost sharing and were more likely to use lower-cost drugs, but the largest effect of the CDHP was to reduce utilization. Employees in the second firm also reduced utilization, but did not shift the timing or use of low cost drugs.

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This paper was revised on February 9, 2015

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Document Object Identifier (DOI): 10.3386/w20927

 
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