The health insurance industry is more complex than ever before thanks to the rapid erosion of the traditional health care model, a surge in high-deductible plans and a major shift toward consumer accountability.
According to the Kaiser Family Foundation, the average deductible climbed to $1,217 in 2014 – an increase of 47 percent in just five short years. In addition, Commonwealth Fund researchers found that premiums for families with employer-funded insurance rose 73 percent while premium contributions by employees soared by 93 percent in the last decade.
The avalanche of health care choices and responsibilities has forged a new world for consumers who are not only facing ever-increasing deductibles, but also tasked with understanding a growing number of services and accounts. Consumers need to better understand all of their options, become more educated about the benefits they choose and stay fully informed about what their decisions mean for their health (and their finances).
Fighting a common misconception
As we continue to ask individuals to shoulder more financial responsibility for their health care needs, there’s a fundamental mistake we first need to address as an industry: The belief that individuals understand health care as it stands today. They don’t.
Between deductibles, out-of-pocket limits, co-insurance, health savings accounts, flexible spending accounts, and all the other terms we throw at them, the typical consumer doesn’t understand the ins and outs of their health care policy. While they might know if something is covered or not, they still aren’t 100 percent sure what all of the numbers in their bill, health statement and/or explanation of benefits documentation actually mean.
This lack of understanding leads to a state of consumer confusion, which will only intensify as changing health care economics make them increasingly accountable for health care decisions that directly impact their wallet. So what can we do to help consumers achieve clarity?
Taking a page from the retail and financial services playbooks, the health care industry needs to put the consumer first and rethink its approach. Forward-thinking organizations have driven many advances over the last several years to embrace the concept of health care consumerism – and, as an industry, we need to continue that momentum toward consumer-driven health care (CDHC).
Embracing consumer needs
The emerging era of CDHC requires an updated business model, and health plans and administrators need to keep up with the changing demands to minimize benefit costs, maintain control and create a competitive edge, health plans and benefit administrators need to focus on delivering a simple, yet comprehensive, consumer brand experience.
Looking at the typical retail scenario, consumers usually understand what they want before they buy their next laptop or dishwasher at the store or online. However, the foundation for the general consumer experience remains undefined in health care. Consumers are unsure what questions to ask or what information they need to make informed health care decisions, so the market as a whole needs to evolve its messaging and the overall consumer experience it delivers.
Answering the call for consumer-centric health care experiences starts with four core components:
1. Welcome consumer perspective. Health plans, benefits administrators and employers all need to proactively seek out consumer feedback. Going beyond delivering what a consumer “might” want or need and finding out what questions they need answered, which resources will resonate, and which formats are easiest and most logical for each consumer will be the true consumer-driven health care nirvana.
Consider hosting quarterly lunch-n-learns to invite direct employee feedback, discuss any potential misunderstandings and encourage ongoing dialogue. Consumers need to be heard, and waiting until the next open enrollment period nullifies many of the educational opportunities. We need to ask consumers what tools they need, analyze which resources are accessed most and dig into the most logical way to help guide consumers and give them the confidence to make informed health care choices.
2. Focus on the financial ramifications. Consumers are now bombarded with wellness and incentive programs, as well as new types of health care accounts – from HSAs and FSAs to health reimbursement arrangements. The interaction between all of these pieces can be extremely overwhelming for the average consumer. Health plans and administrators must connect the dots for all of these programs and make sure consumers can get the information needed to make prudent financial decisions.
Understanding the amount that they owe for a service, as well as the alternatives that could save them money, is absolutely critical as consumers take on more of the health care costs. Eventually, health care decisions will be a day-to-day financial experience. Core elements already embraced by consumers in the personal/retail banking industry like debit cards and online bill pay will become common in the health care evolution.
For instance, most consumers know that they need to have enough funds in their checking account before swiping their debit card at the grocery store. The same fundamental concepts must be applied to their financial health care accounts. The win-win will come when consumers truly understand what they need to do and the best way to pay to get the proper level of care – weighing the economics before making health care decisions. When consumers start to ask if they really need that MRI or if the X-ray is sufficient, we know we are on the right track.
3. Deliver continued education. With more financial responsibility comes a higher expectation of continuous, exemplary support. Consumers are demanding more from the health care system than ever before – from financial tools, educational resources and reimbursement visibility to 24/7, personal support and advisory services just a click or phone call away. Give consumers a wide range of mechanisms to get fast, complete answers to their questions (be it a nurse hotline, provider cost/review tool, or rapid access to service/cost calculators) so they feel empowered in the months/years ahead.
Luckily, investing in educational programs will drive down overall costs across the board – not just for the consumer. A more educated, involved, financially conscientious consumer means less unneeded services and decreases the need for high-cost touch points down the road.
4. Support the consumer-first evolution. Benefits brokers and administrators can gain a sharp competitive edge by proactively shaping the consumer experience. Consumers’ questions and needs will surely change and evolve over time. The constant is that consumers value organizations that think differently and deliver an unparalleled consumer experience. Ally Bank, Amazon, Uber … there are so many examples of cross-industry disruptors with this common foundation.
The health care market is tough. Many flip insurance every year and brokers change all the time. Provide educational programs, comprehensive support and customer service models that help your client – they will come back. Give them simplicity and ease of access. When consumers and employers feel empowered, you will earn loyalty and realize the advan
Service providers also need to consider the consumer transition as they age to ease them into retirement. Being thrown into an entirely new system at retirement would be extremely overwhelming. Providers need to package pieces of their existing plans into retiree programs to reduce the consumer support and education materials needed as the intensity and frequency of services increases. Commonality pays dividends in the long term if consumers understand the basic concepts of a complex system, including health care financial accounts and programs.
In addition, education needs to start early and become a constant. The proliferation of available programs to finance health care costs both pre- and post-retirement demands new consumer education programs. The more consumers plan ahead and save money for retirement health care expenses, the better. HSAs should now be part of the financial planning discussion alongside traditional 401(k) and IRA programs so consumers can understand how to get maximum tax benefits for retirement.
Guiding an evolution
Economics will increasingly drive consumer behavior as the health care industry continues to change in the coming years. The dynamic between health care providers and consumers will further shift as financial pressures rise. If we, as an industry, focus on empowering consumers and sharing helpful information, consumers will quickly become more educated, embrace their role in health care decision-making and better understand the potential trade offs.
The CDHC evolution is upon us, and there’s no stopping the convergence of health care and banking. Consumers need to become self-motivated and receive the education needed to make proper health care decisions.
Meanwhile, employers and health plans need to empower consumers to confidently take control of their health care spending. Giving consumers easy and direct access to educational tools they need to make sound choices will also improve the user experience, create ongoing engagement opportunities and drive consumer loyalty. Be ready for informed consumers who ask more questions and take an active role in financially driven health care choices.