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.