Association Between Employee Earnings and Consumer-Directed Health Plan Choices

The objective of this study was to examine a possible nonlinear association between employee earnings and consumer-directed health plan (CDHP) choice. We collected employer administrative records and insurer claims data for 9,617 households insured through a large multistate employer. A third-party firm extracted, merged, and deidentified the 2005-2006 claims and administrative data. We used multinomial logistic regression to estimate plan choice risk ratios between managed care and two types of CDHPs when a new plan choice set was introduced. This study used a cross-sectional nonexperimental ex post facto design guided by Andersen's Behavioral Model. The study results showed that the highest and lowest earners chose CDHPs. The highest 10% of earners were more likely to choose a health savings account (HSA)-eligible high-deductible plan, and the lowest 10% of earners were more likely to choose a health reimbursement arrangement than a preferred provider organization plan. The association between earnings and plan choice was not statistically significant for the middle 80% of earners. The association between CDHP choice and enrollee earnings may not be a simple, positive, linear relationship. Plan cost and enrollee characteristics are likely more important than are generic classifications of CDHP or managed care. Benefit administrators should focus on plan fit for employee needs, which may entail avoiding categorizing plans by type and focusing on enrollee-plan characteristics. Cost shifting to other benefits, such as workers' compensation, may also become a concern. Although data are limited to a single employer, findings provide valuable insights for employer-sponsored insurance plan choice. However, generalizability suffers because of the single employer source.