Employee choice of consumer-driven health insurance in a multiplan, multiproduct setting

To determine who chooses a Consumer-Driven Health Plan (CDHP) in a multiplan, multiproduct setting, and, specifically, whether the CDHP attracts the sicker employees in a company's risk pool.

We estimated a health plan choice equation for employees of the University of Minnesota, who had a choice in 2002 of a CDHP and three other health plans--a traditional health maintenance organization (HMO), a preferred provider organization (PPO), and a tiered network product based on care systems. Data from an employee survey were matched to information from the university's payroll system.

Chronic illness of the employee or family members had no effect on choice of the CDHP, but such employees tended to choose the PPO. The employee's age was not related to CDHP choice. Higher-income employees chose the CDHP, as well as those who preferred health plans with a national provider panel that includes their physician in the panel. Employees tended to choose plans with lower out-of-pocket premiums, and surprisingly, employees with a chronic health condition themselves or in their family were more price-sensitive.

This study provides the first evidence on who chooses a CDHP in a multiplan, multiproduct setting. The CDHP was not chosen disproportionately by the young and healthy, but it did attract the wealthy and those who found the availability of providers more appealing. Low out-of-pocket premiums are important features of health plans and in this setting, low premiums appeal to those who are less healthy.