Redefining value in health benefits
The cost of health care is increasingly a burden for individuals and their families. This reality should lead us to ask some critical questions, not only about what solutions we’re offering, but also about what experiences we’re creating for individuals.
The following are three themes that continue to surface during our ongoing analysis of ways to better understand the obstacles individuals face when it comes to paying for health care. This information may be useful for brokers and consultants to review with employer clients, especially around enrollment season.
1. Individuals need immediate value from their health plan
If we want to meet the evolving needs of individuals and reduce the burden that health care expenses place on them and their families, we need to be innovative. Traditional health plans with high deductibles are increasingly designed to provide a safety net for the really sick, instead of making everyday health care needs affordable for the majority of employees. These plans require individuals to pay a significant amount out of pocket before they get anything in return – premiums, then deductibles and co-insurance, and often copays, too. It’s not only a financial burden that often results in individuals choosing to defer medical care or to skip it altogether, it’s also confusing and unpredictable. Today’s savvy consumers demand better – and they should.
Helping individuals manage their health care costs has to start with introducing benefits that provide comprehensive and predictable coverage that empowers them to get the care they need in order to stay healthy. This includes plans that reflect the user-centric services, which are often provided via a monthly subscription model they’ve grown accustomed to and that offer clear value and understanding of the cost.
2. Costs are getting in the way of individuals accessing needed care
As mentioned, traditional health plans often make it cost-prohibitive for people to get the care they need when they need it. And that’s going to cause problems and increase costs down the road for individuals, employers, other stakeholders and our society at large.
Employers may not be aware that, regardless of an individual’s salary, 55% of Americans are living paycheck to paycheck, leaving them unprepared to pay for unforeseen out-of-pocket medical expenses. It’s no wonder that many defer care and wait until health issues become an emergency before seeking care. About one in every 10 adults said they either delayed or did not receive medical care due to cost reasons in 2019, according to a 2020 study. Adults in worse health are much more likely than others to defer or avoid care due to cost.
This isn’t a “personal problem” for employees. It’s an issue that impacts everyone, and one that employers should carefully consider as they evaluate which health benefits and payment options they make available to their employees in the coming year.
3. Individuals want flexibility when it comes to out-of-pocket expenses
Even the richest health benefits may require some skin in the game from individuals when certain health issues arise. We need to help employees keep out-of-pocket costs down for common, everyday health care services. And when more serious events do arise – surgery or emergency care, for example – our priority should be helping them manage these costs by offering tools to pay for their expenses in a way that minimizes the burden on their family budget.
Today, the options that are available for paying for out-of-pocket medical expenses are cumbersome, inconvenient and often expensive. For instance, with deductible health plans, the burden is on the individual to negotiate each bill (and there may be many) with the respective provider, and hope to be able to come up with payment options that don’t push their finances past their breaking point. Of course, the alternative is to pay with a credit card, a route that is not available to all, and that comes with a hefty interest cost.
This is especially important, as outside of health care, consumers increasingly expect to be able to pay for almost anything on convenient payment plans thanks to growing availability through companies like Affirm, Sezzle or Afterpay, which offer no-interest payment plans with flexible terms. These payment methods are especially popular among younger generations, most notably Gen Z, who tend to be more wary of credit cards but still prefer or need to spread out payments.
An IBIS World report predicts that the buy now, pay later industry will continue to grow at 9.8% annually over the next five years, and ultimately will exceed $1 billion. If we can satisfy this need for people buying jeans or cell phones, we certainly need to find a way to make it work for people who need to pay for necessary and possibly life-saving health care.
This enrollment season, as employers make decisions that will shape the experiences their team will have in the coming year, we can help steer conversations to consumer-focused health benefits and solutions that offer the value and flexibility that individuals and their families want. By thinking about employees as consumers, we can help employers design a better benefits plan that achieves their ultimate goals of attracting, recruiting and retaining talent. As we hold meetings with employers, let’s talk about these very real issues and opportunities, and address them head on to better meet client needs.
Marek Ciolko is the CEO of Gravie.