Employers have the data, the technology and the drive to push for better models of health insurance.
The 2018 National Health Expenditures fact sheet from CMS showed a consistently distressing story: Healthcare spending was up 4.6% ($11,172 per person), out-of-pocket spending up 2.8%, prescription-drug spending up 2.5%. We all agree these are not sustainable increases, and yet the numbers continue to rise year after year.
The Kaiser Family Foundation reports 2021 insurance premium increases will be modest—averaging about 1.1%—but, with the continuing stress of the COVID-19 pandemic, there is “considerable uncertainty as to what health costs, utilization and enrollment will look like.”
To most employers, this is not news. The challenge is that the current health insurance model offers no solution. The well-worn path is to continue to shift costs to employees in the form of increased premiums and deductibles or narrower networks and restricted formularies. This won’t change the long-term trajectory, and it is having adverse effects in other areas of employee compensation. According to a study by the RAND Corporation, there is good evidence that rising healthcare costs are reducing wages.
For decades, health insurance has been among the most important benefits offered to employees, and it is even more valued during a pandemic. Now is exactly the right time to build better for employers, employees and for the bottom line.
What does better look like?
- Employers and employees have shared incentives to control costs
- Employees have the information they need to make better decisions for their personal health needs—and freedom of choice to take action
- An effective, sustainable and responsible way to focus on value
A Path to Better
For any consumer purchase, making the right decision is easier when you can see the available options, objective quality ratings and costs. Healthcare should be no different. Health insurance design that delivers a marketplace-like experience gives employees the power to make informed choices that can bend the healthcare cost curve. Here’s how.
The convergence of data science, AI and medical research makes it possible to give employees the information they need to understand how care choices impact their health, their pocketbooks and the health plan group overall. We can achieve that through better insurance design.
Related: COVID, healthcare will be top of mind for HR with Biden presidency
Traditional health insurance constrains choice and covers costs after the fact, often leaving insured employees with surprise bills. Modern plan design links evidence-based treatments with quality and cost data to highlight value to employees, encouraging and rewarding them to choose more effective and efficient paths to health.
Offer Plans That Illuminate Treatment Paths and Exact Prices
When it comes to buying a car, a TV or nearly any consumer good, smart shoppers research and consider their options and the associated prices. We need to replicate the same shopping experience in healthcare. If employees were able to search for their condition on a health plan website or app to see the different treatment options and providers available to them—with exact prices—they could make better-informed decisions and choose higher-value options.
Take knee pain as an example. For many people, non-invasive and less-invasive treatments like physical therapy, chiropractic care or therapeutic injections can be more effective, lower-cost alternatives to a surgical procedure like knee arthroscopy. People often don’t know they have these options, nor are they incentivized to start with the least-invasive, lowest-cost treatments. If these treatments don’t resolve the issue, a good health plan will guide the individual along their treatment path and help them find the providers who deliver the best outcomes at the best prices.
Data shows that employees choose more effective healthcare treatments and spend less annually when they’re given options and clear, upfront pricing.
Incentivize Higher-Quality, Lower-Cost Options
Health plans that show cost differences expose value and help employees see their best options. To make this possible, the full range of treatment paths across conditions needs to be evaluated and analyzed to show what evidence-based medicine says about their effectiveness. Provider performance—measured, for example, by complication and readmission rates—must also to be evaluated.
When cost and quality data are shown side by side, it helps employees identify their best option before they get care or fill a prescription. The insurance industry already has this data. We just need to use it.
Enable Personalization and Freedom of Choice
One size does not fit all, especially when it comes to health. With the right data and technology infrastructure and with more empowered employee involvement in healthcare decision-making, health insurance can be personalized to address the specific needs of different employee populations.
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For example, an employer can improve access to mental health resources and therapy or make the cost of childbirth more affordable. Behavior and treatment history can be used to take personalization even further, lowering costs for treatments clinical evidence suggests will be the most effective for a specific individual. This could mean making insulin free or less costly for people with diabetes because being consistent with medication is a key to maintaining health. This, in turn, can reduce long-term health complications and costs.
Just as we can personalize any consumer product or service, this kind of health plan is possible today.
Eliminate Affordability Barriers
A Federal Reserve report found that, in 2018, a quarter of Americans skipped necessary medical care because they were concerned they couldn’t afford the costs. This isn’t the experience any of us wants for our employees.
See also: Employer-sponsored healthcare costs top $21K a year
When we get rid of barriers like narrow networks, deductibles, co-insurance and cost uncertainty, individuals can have the power to manage how they use care based on their personal health needs. Speaking as someone who oversees HR within my organization, I want my employees to get the care they need, and I want them to see their health plan as what it’s supposed to be: a benefit.
Embrace the Opportunity
Even though the health insurance industry hasn’t served employers and their employees well, inertia is powerful. But the risk of maintaining the status quo is a much greater problem.
We now have the data, the technology and an imperative to design a better system, one that provides employees with the tools they need to make more informed decisions around their own health and wellbeing. When we know better, we can do better.
Jodi Hubler, president of Bind, believes innovation and certainty are the keys to health benefits design. A veteran healthcare industry executive, investor and former CHRO, she has a unique perspective on what makes good business, good policy and high-quality employee benefit programs.