New Consumer Health Plans Mean

Changes All Over The Board

Everyone is scurrying to introduce high deductible Health Savings Account plans, reconfigure plan designs around consumer-centric business models, and deploy Web-based support tools for members to access cost, quality and clinical information. The action is fast and furious, but, pre-sale through enrollment, is everyone prepared?

The consumer directed health plan (CDHP) movement has surpassed its tipping point. Large and small employers are embracing these plans. Benefit consultants and brokers have made big bets on transitioning their clients in ?04 and ?05. New HSA tax preferences are stimulating the market. And, there’s an established group of trailblazer CDHPs, regional health plans, Blues and mega-national carriers vying for position in the consumerism game.

Employers have hit the wall as they balance employee expectations for comprehensive benefits with shareholder expectations for bottom-line performance. As a result, there is sweeping acceptance among employers that something must be done–and they are taking action. Large group benefit managers are introducing a new mix of benefit options, shifting roles and responsibilities between employer and employee. In the small group segment, there has been a surge in high deductible plans, health reimbursement and health savings accounts, and consumer-driven health plans that rely on employee decision-making at point of enrollment and at point of care.

Like lessons learned from PPOs of the 1980s and the POS of the 1990s, introducing nontraditional benefit plans can be an intimidating experience for customers–new benefits, new responsibilities and new terminology. Add to this the use of online displays of provider fee schedules, quality of care indictors and reams of medical diagnostic and procedure information–that’s asking a lot from the customer. On a good day, health insurance is bureaucratic and filled with red tape. Communicating accurate, understandable information is a huge undertaking.

For fully insured or self-funded plans, the communication challenge is exacerbated by diverse workforce demographics such as education, income, tech-savvy and geography. Employee communication must be creative and terminology simple if these new benefit plans are to work for consumers to see cost savings and health outcome improvements, and for plan sponsors to contain premiums and satisfy customers.

As employees are asked to drive upfront benefit decisions and stay involved throughout care delivery, they need to be informed, motivated consumers. This means employees must buy-in to their role of making economical, efficient choices about services they want and their willingness to pay. As they?re being asked to spend their own money after years under a system where they got used to spending someone else’s, they need help learning the true cost of a visit to the doctor, hospital and pharmacy. Success hinges on setting realistic expectations, explaining rules of engagement, re-training customer service and providing continuous member education.

For agents and brokers, it’s not business as usual either. They are under pressure to bring clients new solutions, while at the same time, anxious to protect their position in the insurance value chain.

Consumer-based benefit plans have gotten their attention, but they need to learn the details. Short term, they are testing CDHPs and high deductible HSA plans as a door opener and over time, will make these options a regular part of their product portfolio to combat increasing premiums, managed care restrictions and status quo plan designs.

But make no mistake, benefit plans designed to shift financial and care management responsibility to the consumer are no easy sell. Moving an employer from a long-standing HMO or PPO plan won’t be easy. And, getting employees to buy in, rather than be forced in, is a big hurdle. Financial arrangements such as HSA debit cards, account rollover formulas, restricted fee schedules and tiered network deductibles add a new dimension to traditional product sales. Not to mention the intricacies of selling a customer on the “ins and outs” of making physician, hospital and prescription drug choices a day-to-day part of how they manage their benefits.

Precise, easy-to-understand instructions at point of sale are essential. Health plans must commit to an extensive training and education of their distributors in order to reap the rewards of these products, in terms of increased topline growth and product development ROI.

Industrywide change means there’s no better time for a health plan to rekindle its loyalty with the field sales force. Whether a seasoned brokerage veteran or a rookie agent, nothing tops the thrill of turning a prospect into a client. And given competitive rivalry, keeping an existing group client is just as exhilarating. To achieve success, agents and brokers need grassroots support from their carrier partners to understand customer needs, learn complex product features, differentiate against competitors and have the sales support to move them from being quoters to closers.

The fast and furious rollout of consumer-centric benefit products attempts to unite insurers, employers, employees, brokers and providers in a common mission?finding a solution to the nagging health care challenge of managing costs, broadening access and improving outcomes. However, if speed to market takes precedence over adequate preparation, these products are nothing more than a flash in the pan.

Having just come out of a stormy relationship with managed care, consumers are asking for more control and more decision-making power. More importantly, they want good value for their money. If they are not fully prepared to assume new roles and responsibilities, consumer-centric plan designs simply will not work. The burden of higher education falls onto insurers, employers and brokers. To avoid the backlash of broken promises and missed expectations, consumer-directed plans must be well communicated using creative, practical tools to engage and educate customers, all customers.

Lindsay R. Resnick is senior vice president of Finelight, a national marketing communication firm serving health care, insurance and financial services companies. He can be reached at lresnick@finelight.com


Reproduced from National Underwriter Edition, April 2, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.