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GAO: HRA Healthcare Spending Less than Other Health Plans

Janice Simmons, for HealthLeaders Media, August 23, 2010

This smaller increase for the HRA group was partially driven by decreases in spending for prescription drugs. Also, average annual use of services per enrollee increased by a smaller amount—or decreased—for the HRA group compared with the PPO group for six out of eight services GAO reviewed.

For the private employer, from the two-year period before switching (from 2001 to 2002) to the three year period after switching (2003-2005), average annual spending for the HRA group increased by $152 per enrollee compared with $206 for the PPO group.

This smaller increase for the HRA group was partially driven by smaller increases in spending for physician office visits and decreases in spending for emergency room services. Additionally, average annual use of services for each enrollee increased by a smaller amount—or even decreased—for the HRA group compared with the PPO group for four out of seven services GAO reviewed.

GAO also found in its analysis that:

  • While data from the national insurance carriers showed that enrollees in the HRAs were younger than those in PPOs, GAO's review of published studies produced mixed evidence on the ages of HRA relative to traditional plan enrollees.
  • HRA enrollees were more likely to elect single coverage than traditional plan enrollees, GAO found. However, data from the national insurance carriers showed that 44% of HRA enrollees compared with 42% of PPO enrollees opted for single coverage in 2004.
  • The published studies GAO reviewed "consistently found" that HRA enrollees had higher salaries than did traditional plan enrollees: for example, a case study of a large employer found the average salary of HRA enrollees was $93,409, compared with $69,555 for PPO enrollees.

Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at jsimmons@healthleadersmedia.com.

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