cpb netherlands bureau for economic policy analysis
DESCRIPTION
CPB Netherlands Bureau for Economic Policy Analysis. Erasmus University Rotterdam. An application of Albert Wong's simulated lifecycles to health savings accounts Rudy Douven (CPB, iBMG). Today is Celebration time. Albert Wong’s simulated life cycles will be approved!!. - PowerPoint PPT PresentationTRANSCRIPT
hhhkkkkkkkkkkkkkkkkkkkk
Health Savings Accounts
An application of Albert Wong's simulated lifecycles to health savings accounts
Rudy Douven(CPB, iBMG)
CPB Netherlands Bureau for EconomicPolicy Analysis
Erasmus University Rotterdam
15 March 2012
CPB Netherlands Bureau for Economic Policy Analysis
Today is Celebration time
Health Savings Accounts 15 March 2012
Albert Wong’s simulated life cycles will be approved!!
CPB Netherlands Bureau for Economic Policy AnalysisHealth Savings Accounts 15 March 2012
What are simulated health care life cycles?
0 20 40 60 80
020
00040
000
0 20 40 60 80
020
00040
000
0 20 40 60 80
020
00040
000
0 20 40 60 80
020
00040
000
0 20 40 60 80
020
00040
000
0 20 40 60 80
020
00040
000
0 20 40 60 80
020
00040
000
0 20 40 60 80
020
00040
000
0 20 40 60 80
020
00040
000
0 20 40 60 80
020
00040
000
0 20 40 60 80
020
00040
000
0 20 40 60 80
020
00040
000
0 20 40 60 80
020
00040
000
0 20 40 60 80
020
00040
000
0 20 40 60 80
020
00040
000
0 20 40 60 80
020
00040
000
CPB Netherlands Bureau for Economic Policy AnalysisHealth Savings Accounts 15 March 2012
What is so special about these cycles?• Its new!
• We get better information about health care costs How are health care costs distributed over the life cycle? How large is the variation in costs among individuals? How large are our future health care costs, given the past?
› if we are 5, 45, 60, 90 years old? How large are the differences for different types of care?
CPB Netherlands Bureau for Economic Policy AnalysisHealth Savings Accounts
6 different health categories for cure (and 2 for care)
15 March 2012
CPB Netherlands Bureau for Economic Policy AnalysisHealth Savings Accounts
Application: Health savings accounts• Current research project by Rudy Douven (CPB, EUR), Remco Mocking
(CPB) and Albert Wong (RIVM, UvT).
• Idea project:
Are health savings accounts more efficient than annual cost sharing mechanisms?
15 March 2012
CPB Netherlands Bureau for Economic Policy AnalysisHealth Savings Accounts
Year 1: Mandatory annual deductible of 220 euros
If you need health care
Price larger than 220 euros
you pay 220 euros
15 March 2012
If you need little or no care
Price =P < 220 euros
you save 220-P euroswhich you put on your bank account
CPB Netherlands Bureau for Economic Policy AnalysisHealth Savings Accounts
Year 2: exactly the same rules apply
If you need health care
Price > 220 euros
you pay 220 euros
15 March 2012
If you need little or no care
Price P < 220 euros
you save 220-P euroswhich you put on your bank account
CPB Netherlands Bureau for Economic Policy Analysis
Idea of individual mandatory deductible
Health Savings Accounts 15 March 2012
• Advantage: less moral hazard Health care becomes more efficient
• Disadvantages: less solidarity Chronic ill pay every year 220 euros, Healthy people pay (much) less
• Main question: Can we improve on both aspects with health savings accounts?
CPB Netherlands Bureau for Economic Policy AnalysisHealth Savings Accounts
How does a health savings account work?
15 March 2012
If you need health care
Price > 220 euros
you pay 220 euros
If you need few health or no care
Price P < 220 euros
you pay X=220-P euros into health savings account
CPB Netherlands Bureau for Economic Policy AnalysisHealth Savings Accounts
Year 2: Rules change!
15 March 2012
You paid 220 euros in first year If you need health care
Price larger than 220 euros
you pay 220 euros
You paid less than 220 euros in first yearIf you need little or no care
Price P < 220+X euros
total savings: 220+X-P euros
which you put on your bank account
CPB Netherlands Bureau for Economic Policy AnalysisHealth Savings Accounts
Idea of health savings accounts
15 March 2012
• More solidarity Relatively healthy people pay money into their savings account to
use it if they become ill later
• More efficiency Relatively healthy people face higher deductible when becoming ill
CPB Netherlands Bureau for Economic Policy AnalysisHealth Savings Accounts 15 March 2012
Expand idea of health savings accounts
• Length of saving period not 2 years, but from 18-65, from 0-end of life etc.
• Maximum deductible for Health Savings Account When ill use all money up on the account to a maximum amount
CPB Netherlands Bureau for Economic Policy AnalysisHealth Savings Accounts
However life is not that easy!
15 March 2012
• Consumers will react on HSA´s and form expectations
• HSA´s are less efficiënt than a deductible If health shock in period 2 is large and known to consumer
Idea: Consumers know they have to spend money in period 2 andtherefore will spend more money in period 1 as well.
CPB Netherlands Bureau for Economic Policy AnalysisHealth Savings Accounts 15 March 2012
Crucial for evaluation HSA´s
• How do individuals respond to (large) deductibles? some evidence from famous RAND experiment in the US (Newhouse, 1997)
• Are consumer forward looking? some evidence says yes: (Aron-Dine, Einav, Finkelstein, Cullen, NBER, 2012)
CPB Netherlands Bureau for Economic Policy AnalysisHealth Savings Accounts
How do individuals form their expectations on future health care costs?
•etremely complicated but?
15 March 2012
WE HAVE ALBERT WONG´S
SIMULATEDLIFE CYCLES!!!
CPB Netherlands Bureau for Economic Policy AnalysisHealth Savings Accounts
Simulate expectations with AW´s life cycles
15 March 2012
0
• Individuals have perfect information about future costs• Individuals know distribution of future costs• Chronically ill have different expectationsetc. etc. • Allow for time preference for consumer choice
future payment is less valuable than current payment
CPB Netherlands Bureau for Economic Policy AnalysisHealth Savings Accounts
Some first experiments with our simulation model
15 March 2012
Model 1: Annual Deductible
• Deductible: 150 euros
• Setup model• Consider only individuals between 18-65• Perfect information about future, time preference is 0• Fixed premiums for each individual
Model 2: Health Savings Account
• HSA from age 18-65• Payment out of HSA to consumer at age 65• Annual payment in HSA: 150 euros• Maximum deductible: 1000 euros• You pay OOP only with money in HSA
CPB Netherlands Bureau for Economic Policy AnalysisHealth Savings Accounts
A first example
15 March 2012
Full Insurance Deductible Health Savings Account (150 euro) (max deductible 1000 euro)% fixed premium = 100% 90.9% 88.0%% out of pocket payments = 0% 8.3% 11.8%% less health care = 0% 0.8% 0.2%
First Example:• Health savings account model less efficient than annual deductible model• Solidarity unclear
CPB Netherlands Bureau for Economic Policy AnalysisHealth Savings Accounts
Future research: continue search for the holy grail:
• Vary with size of annual payment into HSA• Vary with maximum deductible size for HSA• Allow for negative savings in HSA• Vary time span of HSA• Vary with price sensitivity effect for consumers• Apply HSA for different age groups• Vary with different types of care
General practicitoners Pharmaceuticals Hospital care Physiotherapy etc.
15 March 2012
CPB Netherlands Bureau for Economic Policy AnalysisHealth Savings Accounts 15 March 2012