For decades, the health insurance industry has worked, mostly unsuccessfully, to slow the pace of increasing cost. The complexity of our medical delivery system makes the task daunting, given complex care delivery models, misaligned incentives and payment methods, the pace of technological advances, and society’s preference for broad provider network access. In recent years, cost containment initiatives have focused largely on advancing consumerism to buck the trend, nudging individuals to be more responsible for navigating the market, and providing tools intended to help them do so.
Some consumer tools have had immediate impact; others are and will continue to be slow to contribute to controlling cost. Telemedicine, for example, holds promise across multiple specialties, but applications that simply ease access to primary care services and provide consumer convenience may not really reduce system cost. Cost transparency tools theoretically align well with consumer driven health plans, but the underlying maze of health delivery and provider reimbursement arrangements challenges the near term value these tools offer for many procedures or conditions. In summary, there are no silver bullets and the health system as structured today cannot pivot effectively.
But there are some strategies that can immediately influence cost trends. Providing consumers with access to a health plan selection decision support tool is one approach to proactively manage cost now. Studies indicate most consumers choose health plans poorly; random selection would be as effective — or even more so.1, 2 Without support, consumers tend to overbuy coverage, stretching to purchase the “richest” coverage plan they can afford. A good tool helps consumers quantify expected out-of-pocket costs (e.g. copays and deductibles) for each plan option, giving the individual a complete picture of likely costs for each plan.
Picking the right plan can save employees significant money, often hundreds or thousands of dollars annually. And if employees feel they’ve made an informed choice of plans, they are more likely to take ownership for making that choice work. HDHP and HSA selection tends to increase significantly with access to decision support, typically leading to more judicious use of services and a dampened cost trend.
Decision support can be implemented easily, quickly and inexpensively without disrupting current platforms or administrative processes, a potentially valuable capability for midsized employers looking to push down the consumer-driven path.
We’ve been evaluating employee use of decision support for years, and have identified four critical success factors for decision support models. These factors are consistent with how employees might view support for other major purchases, like buying a car or finding the right mortgage. Here are the four key factors for effective health plan decision support:
1. Speed and ease of use is paramount — avoid questions that require research, estimation or calculations. Effective decision support does not create work or waste time. The tool should take less than five minutes so that 50 percent or more of employees actually use it.
2. Consumers need to understand total expected cost of medical care to make a rational selection. Total cost is the employee’s share of premium plus estimated out-of-pocket cost for each plan option, taking into account variances in copays, deductibles, OOP maximums, etc. Accurate forecasting of OOP cost, while keeping the user experience quick and easy, is the holy grail of health plan decision support.
3. Decision support tools must be accessible, mobile-friendly and adaptable for family discussions or counselor/enroller support. Output must be informative but not overwhelming. Good tools don’t make a blanket recommendation but provide relevant information and rank options by best-to-worst fit, with supporting evidence.
4. Above all else, decision support models should create consumer peace of mind — the feeling you get when you make an informed choice. So the model must be unbiased, credible and independent. Models that lead the consumer to consider purchasing ancillary products may not have the rigor or impartiality to make the right health plan choice.
Encouragement of rational consumer behavior in health care is a good strategy for the long term. And helping employees pick the right plan is an effective, market-proven tactic that can be adopted today, yet a majority of employees still do not have access to this tool. Why not empower employees now with access to an unbiased and informative exchange-like experience?
1 “Can Consumers Make Affordable Care Affordable? The Value of Choice Architecture” Johnson, Hassin et al.
2 “Do Employees Make Sensible Health Insurance Decisions?....” Bhargova, Loewenstein, Sydnor et al.
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