That same problem continues to be the target of value-based benefit design solutions today, manifested in a variety of interesting and complex incentive programs.

PROBLEM: Benefit participants who don't have material wallet share are not motivated to make “good” purchasing decisions with their health care dollars.

It seemed evident during the early days of consumer-driven health care that the solution was related to finding the right kind of financial motivation to help people more consistently pursue what we would define as “good” decisions when allocating financial resources to health care products or services.

Give someone a wallet and fill it with benefit dollars they can control, and they'll be inclined to spend them more effectively (i.e. get more bang for their buck). You could call this Consumerism 1.0.

In Consumerism 1.0, we also saw the emergence of a variety of simplified assumptions around how people would behave once they applied their “natural consumer” persona to the health care arena.  Assumptions included:

• People would naturally apply the same type of cost/quality trade-off calculations to health care decisions that they use in other retail settings.
• Wallet share is always visible, and therefore has the ability to impact purchasing decisions.
• “Benefit dollars” (or real money for that matter) are the ultimate trump card currency for motivating behavior change.

On the surface, these assumptions seemed fair and reasonable. But as stated earlier, motivation's a tricky thing and doesn't always allow itself to be easily understood or calculated in formulaic fashion.

Consumerism applied to the health care purchasing environment turned out to have some not-so-expected results. Case in point: A study published by the Journal of the American Medical Association found a new consumer perspective within the often analyzed placebo effect.

In this study, researchers asked a group of participants to endure a series of electric shocks. Participants ranked their pain level after the initial test. Before administering a second set of shocks with exactly the same level of electricity, the participants were separated into two groups and each given what they were told were painkiller prescription drugs (but were actually sugar-pill placebos with no measurable effect on pain). Group A was told their medicine cost 10 cents per pill and Group B was told their painkillers were $2.50 per pill—25 times the cost.

Can you guess the outcome?

At its very core, the results of this study challenged the original assumptions around Consumerism 1.0. Only 65 percent of Group A reported their pain level was reduced by taking the placebo, while a full 85 percent of Group B reported reduced pain levels.

It's just a single study, but telling nonetheless. It seemed as though we may have our own deeply ingrained assumptions about cost and quality as they relate to health care.

Mainly, that higher cost usually has a proportional relationship to higher quality—and as consumers, we may not have the propensity to make cost/quality tradeoffs like we do elsewhere. Someone may not be OK with a lower quality knee replacement that doesn't allow full mobility or clicks when he walks, just because he got a great deal on it.

This is new insight into how value may be derived as we all make health care purchasing decisions.

The other two core assumptions may also have some challenges that need to be addressed if we accept this first version of consumerism is the best destination.

First, assuming wallet share (or cost) is always visible and easily understood is just plain dangerous from a benefit strategy perspective. Numerous studies have shown that—on average—we spend less than 60 minutes annually reviewing the employer-sponsored health plan options offered to us.

Plans are complex and summary plan descriptions feel more like ILPDs (Incredibly Lengthy Plan Descriptions) to most of us. Absorbing all of the “what if” scenarios and understanding how they may or may not generate member responsibility or out-of-pocket financial exposure for members and their household budgets is a daunting task to say the least.

Additionally, assuming participants do get a rudimentary, yet functional grasp on their benefit structure, finding accurate, reliable and easily accessible cost and quality information is waiting as the next challenge around the corner.

The pricing infrastructure our industry has assembled creates the possibility that the same services and treatments in the same geographies could have a wide variation in expected and actual cost.

Using a cost treatment estimate tool from a nationally respected source of medical information, I was able to look up the expected cost for treating a heart attack in Manhattan. The expected out-of-network cost varied by 926 percent from the bottom to the top of the range. A very tough setting for driving consistent consumerism behaviors, even if the benefit structure is understood.

So what now?

The picture is not as bleak as it may seem after wading through these conclusions on Consumerism 1.0. As in any strategy, iterative development based on learning from the first try creates opportunity for new outcomes.

As professionals in this industry, the opportunities that currently exist for us to help employers (plan sponsors) to better understand motivation have the potential to be game changers.

 As Consumerism 2.0 has evolved, incentives (and dis-incentives) have blossomed as key motivational tactics deployed in an attempt to shape consumer behavior. It seems almost out of place to talk about sponsoring a biometric screening event, clinical health risk assessment or chronic condition coaching program without mentioning the use of appropriate incentives to drive participation.

Daniel Pink, in his book Drive: The Surprising Truth About What Motivates Us, talks about the current perception around incentives/penalties within the context of benefit strategy: 

Rewarding an activity will get you more of it.  Punishing an activity will get you less of it.

On its surface, this seems to be a logical assumption that has made its way into so many of our strategies that are intended to support consumerism. We have bought wholesale into the idea that driving higher participation levels in consumeristic health and care management programs will logically drive better health outcomes. 

Initially, there's all sorts of evidence that behaviors do change when financial incentives are attached.

People seem to pursue activities that help them accrue points, dollars or other currencies that they can use to offset their costs on health care expenses. Participants consistently seem hesitant to leave dollars on the table when they are available as incentive rewards for walking challenges, “know your numbers” educational campaigns and disease management participation. 

But, are they truly motivated in a sustainable way by the intermediate reward of lower cost? The next stage of consumerism in health care may be at the epicenter of that question.

Are we truly motivated by cost avoidance only as a singular incentive?

Is there a more direct driver that has the potential horsepower to create long-term changes to our behavior that put us on a better health trajectory?

Are we on the precipice of (re)discovering a more basic, natural motivator: the intrinsic value of experiencing consistently better health status?

In an employment setting, when considering compensation strategies, some believe using financial rewards as a primary motivator is not sufficient and the best use of money as a primary motivation tool is to pay people enough to let employees focus elsewhere.

Perhaps that is the next frontier of consumerism in health care?

As trusted advisers on benefit strategies, it's incumbent upon us all to have this context in mind when working with our employer clients. Effective VBBD strategies can then be driven through:

• Creating shared understanding of an employer's specific population and where it currently sits on a consumer continuum.
• Breaking down any misdirected perceptions of cost in current benefit structures.
• Finding a way to calculate how much financial reward is enough to take cost (as the only concern) off the table, allowing members to focus on deeper motivations.
• Defining and integrating a sense of value into our programs that speaks directly to how consistently better health status has true, universal reward.

Laying this foundation can help create a whole new perspective on motivation and the opportunity to create shared strategies for employers/plan sponsors that tap into a more direct driver of behavior.

Unleashing the power behind the intrinsic value of better health may be the pivot point for Consumerism 3.0 and beyond.