As published at Forbes.com July 6, 2022
For the past thirty years, employer-sponsored health plans have been dominated by the fee-for-service managed care model. I don’t think there is a person alive who thinks it’s gone well. Unless, of course, your definition of “gone well” is off-the-chart profits for health insurers, pharmacy benefit managers (PBMs) and healthcare systems.
The Kaiser Family Foundation 2021 Employer Health Benefits Survey indicates that the average family premium has increased 47% since 2011, while the average single deductible rose from $584 to $1,669 since 2006.
This is the very definition of pay more, get less.
A common benefit strategy that employers have implemented year after year is increasing member out-of-pocket costs and/or the employee’s share of the premium. Part of that strategy was designed to reengage patients and encourage them to make more informed healthcare decisions—in essence, make them more responsible consumers to help eliminate unnecessary care and lower utilization.
Conventional wisdom suggested that plan designs were too rich and that members needed to have more “skin in the game” so they would not seek care unnecessarily. Basically, insurers were throwing members under the bus, blaming them for excessive premiums increases.
A lack of actionable data left plan sponsors in the dark, so they had no choice but to accept this narrative. Little did they know that consumerism was simply a shell game that was about to take premiums and out-of-pocket costs into a new stratosphere.
In the early 2000s, insurers had a big problem on their hands: many employers had already reached the ceiling of what state insurance departments would allow for member cost-sharing for office visits and inpatient and outpatient services. Prior to the early 2000s, most in-network services were subject to copays, which are specific dollar amounts that the member was responsible for, depending on the service and location. High-deductible health plans (HDHP) accounted for only 5% of plans in 2007 but grew to 20% by 2013 and today make up a majority of plans.
These new “consumer-directed” plans started off with modest deductibles and coinsurance that applied to only a select few services: inpatient hospital, durable medical equipment and emergency room visits, as examples. Like the plans that came before them, the deductibles and coinsurance rose quickly, and the services they were applicable to expanded as well.
Today, health savings-compatible plans (HSAs) are the most extreme example of HDHPs. Have they lowered utilization? Yes, to an extent, but at what cost? Studies show that the U.S. has one of the least healthy populations and the lowest-quality healthcare systems among high-income countries. This is despite spending more on healthcare than any other county. A primary reason is that while HSAs and other HDHPs aren’t without merit, they often go unfunded and result in care avoidance and higher-cost claimants down the road.
Why do plan sponsors continue to use the same flawed solutions with the same insurers if alternatives exist that promise better results and health outcomes?
One reason is that very few consumers and plan sponsors are aware of them. Why? Those they entrust to help them make their benefits decisions are entrenched with the status quo. Another and perhaps the greatest problem is that the consumer’s behavior has been groomed for over two decades, and their advisors are selling to their expectations. Employers have come to accept that annual insurance increases are as certain as death and taxes.
There are, in fact, alternatives that exist outside the traditional fully insured or self-insured carriers. This market is ripe with technology, actionable data, realigned incentives, tools and resources dedicated to the healthcare consumer, a new breed of clinician, advisor and health insurance administrator.
Consider Health Rosetta as an example of these alternative solutions. (Full disclosure: I am a member of Health Rosetta.) Health Rosetta helps employers accelerate the adoption of simple, practical, non-partisan fixes to our healthcare system. Health Rosetta is an ecosystem of advisors, payers, solution partners and employer purchasers that builds high-performance health benefits that put the patient and practitioners before profits.
Employees and their families, which have no control over the benefits decisions, are suffering the consequences of modern-day healthcare and insurance benefits. In fact, they are struggling to get by, and their healthcare expenses are an unnecessary stressor. A study by the Federal Reserve found that 51% of Americans have $5,000 or less in savings, while 35% have $1,000 or less. Given these figures, it’s no surprise that their annual out-of-pocket exposure is obviously very intimidating.
It does not have to be this way. There are a few subtle changes a plan sponsor can make that will help them attain better results that can significantly impact the cost of insurance and the quality of healthcare.
• First, the employer and their members must identify as the consumer of healthcare, not purchaser of insurance. Insurance is a way to finance healthcare risk; it is not healthcare. Consumers need data to make informed healthcare decisions; thus, they must demand actionable data to shop for healthcare wisely.
• Next, the benefit decision makers must allocate additional time to the benefits renewal and selection process. Too often, they are reactive and work on the carrier and broker timeframe, which leaves little time to make change without disruption. As a consequence, they settle for paying more and getting less.
• Lastly, employers must demand more from their benefits partners. They must be picking up on the conversations surrounding healthcare and insurance, and while they can’t be expected to put all the effort into learning about new solutions, they must keep their partners accountable. If the consumer increases their expectations, they will receive better solutions.
We are not birds, so why should we settle on healthcare and health insurance that is for the birds?
The information provided here is not intended as medical advice, diagnosis or treatment. You should consult with a qualified healthcare provider for advice concerning your specific situation.