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GAO: HRA Healthcare Spending Less than Other Health Plans

Janice Simmons, for HealthLeaders Media, August 23, 2010

Enrollees in a health reimbursement arrangement—a consumer-directed health plan that combines a high-deductible health plan with a tax advantaged account—were found in both public and private plans to spend less on healthcare annually than those enrolled in other types of health plans, according to the Government Accountability Office.

One of the reasons may be that enrollees in HRAs tended to be healthier—and therefore kept costs down, according to a GAO report. This pattern was evident even before enrollees signed up for the HRA, GAO says.

For instance, the average annual spending per enrollee for the public employer's HRA group was $1,505 lower than a preferred provider organization (PPO) group for the two-year period prior to switching. Likewise, the private employer's HRA group spent $566 less per enrollee for the two-year period prior to switching to the PPO group.

At the same time, in 21 GAO-reviewed studies, 18 studies found they were healthier than traditional plan enrollees—based on utilization of healthcare services, self-reported health status, or the prevalence of certain diseases or disease indicators.

Overall, spending for private employer enrollees in HRAs generally increased by a smaller amount or just decreased compared with those in traditional plans that GAO reviewed.

With public employer, from the two-year period before switching (2001 to 2002) to the five-year period after switching (2003 to 2007), average annual spending for the HRA group increased by $478 per enrollee. At the same time, it increased by $879 for the PPO group.

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