Do high-deductible health plans affect price paid for childbirth?

Abstract

Objective: To test whether out-of-pocket costs and negotiated hospital prices for childbirth change after enrollment in high-deductible health plans (HDHPs) and whether price effects differ in markets with more hospitals.

Data sources: Administrative medical claims data from 2010 to 2014 from three large commercial insurers with plans in all U.S. states provided by the Health Care Cost Institute (HCCI).

Study design: I identify employer groups that switched from non-HDHPs in 1 year to HDHPs in a subsequent year. I estimate enrollees' change in out-of-pocket costs and negotiated hospital prices for childbirth after HDHP switch, relative to a comparison group of employers that do not switch plans. I use a triple-difference design to estimate price changes for enrollees in markets with more hospital choices. Finally, I re-estimate models with hospital-fixed effects.

Data collection: From the HCCI sample, childbearing women enrolled in an employer-sponsored plan with at least 10 people.

Principal findings: Switching to an HDHP increases out-of-pocket cost $227 (p < 0.001; comparison group base $790) and has no meaningful effect on hospital-negotiated prices (-$26, p = 0.756; comparison group base $5821). HDHP switch is associated with a marginally statistically significant price increase in markets with three or fewer hospitals ($343, p = 0.096; comparison group base $5806) and, relative to those markets, with a price decrease in markets with more than three hospitals (-$512; p = 0.028). Predicted prices decrease from $5702 to $5551 after HDHP switch in markets with more than three hospitals due primarily to lower prices conditional on using the same hospital.

Conclusions: Prices for childbirth in markets with more hospitals decrease after HDHP switch due to lower hospital prices for HDHPs relative to prices at those same hospitals for non-HDHPs. These results reinforce previous findings that HDHPs do not promote price shopping but suggest negotiated prices may be lower for HDHP enrollees.

Keywords: consumer behavior; high-deductible health plans; hospital prices; insurance benefit design; price shopping.

FIGURE 1

Unadjusted trends in childbirth prices: These figures show the unadjusted mean negotiated transaction price by year for uncomplicated childbirth for three groups: the comparison group with a stable, low‐deductible health plan, the HDHP group prior to switch, and the HDHP group post switch. (A) Mean transaction price, full sample. (B) Mean transaction price, areas with ≤3 hospital choices. (C) Mean transaction price, areas with >3 hospital choices. HDHP, high‐deductible health plan

FIGURE 2

Average hospital transaction price for normal childbirth (in $). Estimates are based on predictions from GLM that uses a difference‐in‐differences framework to control for baseline differences between women who switch to an HDHP and those who remain in a stable benefit plan. Estimates above show the predicted prices based on whether women belong to an employer group that rolls over to an HDHP or the comparison group that remains in a low‐deductible plane. Markets with more choices are those in which there are more than three hospitals in a hospital service area providing birth services. GLM, generalized linear model; HDHP, high‐deductible health plan