By Matt Thomas, President, WorkSmart Systems Inc.
Google “health care consumerism” and by the time you weed through theoretical charts, advertisements and negative opinions, you won’t come away with much useful information for health care consumers or the broker community.
Most of us are inherently familiar with consumer-driven health plans (CDHPs), and whether you are a broker, employer or insured, you will likely agree that these plan options are successful tools to slow the growth of health insurance premiums.
However, CDHPs are just one piece of an overall strategy to stem and gradually reduce health care costs. Implementing a “true consumerism” platform not only will change the structure of a health plan, but it also will become a valuable tool for selling business and maintaining current client lists year after year.
The platform consists of three key elements:
1. Adopting CDHPs and the Cost Shift: This will be the most familiar part of the strategy, with most insurance brokers selling these types of plans in greater numbers. It is obvious that the provider copay, prescription copay, low deductible and low out-of-pocket maximum system – the norm over the past 25 years -- is simply not sustainable. Most employers have been dragged, kicking and screaming, down this road. The industry has come a long way over the past few years in creating a proper balance of cost share between the health plan and the participant that encourages the participant to think about his health care spending. One of the most overlooked aspects of this transformation is the education of – and communication with – the plan participants. If you take the time to educate participants on the evolution of plan design and the importance of these changes from a long-term financial perspective, then the satisfaction with the CDHP options increases significantly.2. Proactive Wellness Program: Many employers offer a “wellness” program and many brokers and agents have experimented with such programs. If you only give the wellness program lip service, it will be useless.
An effective wellness program should include the following:
- Continual education and information that can be provided online and on-site.
- Annual health risk assessment (HRA) with health screenings performed at the employer site and follow-up coaching based on the results of the HRA.
- Incentives based on scores that are tied to the health risk assessment/screening results. For example, a four-tier scoring and incentive system that encourages incremental improvement from year to year is an effective tool.
But why not
- Just Following Doctor’s Orders: Many consumers simply do not know that they have the option of shopping for health care services. People have been conditioned to do what the doctor, the authority, tells them to do. The average patient is usually scared, or at least apprehensive, about the condition in question, so the cost component is not in the forefront of one’s mind. When an individual thinks only about what insurance is going to pay instead of what the overall cost of care will be, it becomes an insurance problem and not a cost of care concern.
- Limited Accessibility to Pricing: Most participants have limited or no access to health care pricing information. The average person cannot navigate the labyrinth of physician, lab, hospital and PPO contract pricing to get a straight price for a service. Tools are available that can make this process virtually painless, but the availability of these tools is not realized; therefore, the use of them is often not implemented. Forming partnerships with third party companies, such as Healthcare Blue Book, provides participants with accurate pricing information and explanation of these costs. Take it a step further and provide more layering, such as proactive education, case studies and incentives to use the pricing comparison tools, and participants have a wealth of information at their disposal.
- Conditioned Thinking: For years, participants have been conditioned to think only about deductible and out-of-pocket maximum. Sponsors must do a better job of educating participants on the importance of reducing overall health care costs regardless of whether the plan or the participant pays for the service. Participants must be made aware with continued education that every dollar saved in the plan is ultimately a savings to them in their insurance premium. This is a foreign concept to many simply because most participants are not receiving the message.
- They Don’t Know What They Don’t Know: There is a general lack of consumer awareness regarding the vast pricing disparity from provider to provider. When participants search for pricing, outcomes and providers in the Healthcare Blue Book, for example, they are given the low price, fair price and high price for a particular health care service. The results also provide a breakdown of providers and where each provider falls in that low-fair-high range.
- Uncomplicated Birth: Fair price = $7,788; High price = $15,003
- MRI (Spine with and without contrast): Fair price = $1,141; High price = $4,084
- Brain CT: Fair price = $404; High price = $1,300
- Colonoscopy (with biopsy): Fair price = $1,926; High price = $5,140
The average disparity of the above examples is 54 percent. That’s equivalent to a half-price deal, and who doesn’t want to save money?
For small- and medium-sized companies, data shows that 70 percent of health care costs are due to claims under $25,000. In other words, the vast majority of health care claims are non-life threatening conditions where shopping for cost of service is a valid option. If an employer uses the “true consumerism” strategy, it could reduce overall health care costs, including insurance premiums, by as much as 11 percent each year. Compare that statistic with the fact that the average annual health insurance premium increase over the past 10 years has been more than 11 percent, and this type of cost reduction is a true game changer.
“True consumerism” is an opportunity for insurance brokers, agents, and consultants to truly help their clients. Whether they develop these programs on their own or form strategic partnerships to provide them, they can grow beyond a commodity and become an invaluable partner to their clients.
About the Author:
Matt Thomas is president of WorkSmart Systems, Inc., an Indianapolis-based Professional Employer Organization (PEO) serving more than 300 clients with employees in 37 states.
Matt Thomas is president of WorkSmart Systems, Inc., an Indianapolis-based Professional Employer Organization (PEO) serving more than 300 clients with employees in 37 states.
