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It’s Not My Money: Getting Consumers Invested in Healthcare

Recently, TruTV aired an episode of "Adam Ruins Everything", in which the host Adam Conover focuses on ruining the viewer’s perception of the healthcare industry by educating them on why healthcare is so expensive.

The episode opens with Adam Conover having a conversation with a would-be patient who has come to the hospital for a cold or the flu. The patient explains that she wants as much care as possible regardless of cost because she simply pays her insurance premium and knows she is getting the best treatment.

Following the episode’s airing, I saw the video clip appear dozens of times on social media sites. Each time, accompanied by comments expressing some form of shock or disgust that healthcare costs are overinflated and hidden away from the consumer. Then, other comments said, “She went to the hospital for a cold?” While the comment sections on the internet can often be a "Wild West" of sorts with opinions ranging from reasonable to fringe, these two comments combined pinpoint a major issue with employee benefits.

All too often, patients misuse and overuse healthcare because of a lack of understanding of the costs associated with the care they receive.

When discussing healthcare consumerism, you will often see comparisons of how consumers research and shop for other products, like a new flat-screen television. Unlike the average television buyer, the average healthcare consumer enters the healthcare marketplace, closes their eyes, points to one, and hopes for the best when the doctor’s bill arrives.

There are at least a dozen well-known, reputable, healthcare provider review websites. Each site does an excellent job highlighting patient reviews, provider specialties, accepted insurance, and provider education and certifications, but few have any substantial price comparison tools. This model encourages the consumer to choose a provider based almost entirely on quality of care, with the only hint of cost consideration being whether the provider accepts your insurance.

If the consumer wants to compare provider costs, the consumer must find another source, such as price transparency tools available through the insurance carriers.

Many of the available price transparency tools do not contain any quality of care information. Once again, this leads to a situation where the consumer often makes a one-sided decision based on the assumption that higher cost is directly correlated to a higher quality of care.

Ideally, the consumer would have access to cost and quality of care comparison tools in one place, but that still assumes the consumer uses the tools. Unfortunately, utilization of carrier price transparency tools has been disappointingly low. For example, one major carrier’s price transparency tool is available to 94% of its commercial enrollees, but only 3.5% of those enrollees use the tool. So, why don’t they use the tool?

If we take a step back to our story from "Adam Ruins Everything", we find this attitude of, 'Why should I shop around? I pay my insurance premium and don’t care how much the insurance company pays.'

Employee benefits professionals know the amount of insurance claims submitted is directly tied to insurance premiums and plan designs that impact cost. However, consumers' lack of understanding about this correlation leads many to misuse healthcare and undervalue the benefits they receive from their employers. The key to solving this issue is to ensure that consumers see and feel this correlation.

Planning is at the core of good financial decisions. We plan for retirement, we plan a monthly household budget, but very few people plan for healthcare expenses. When you combine a lack of financial planning with an “it’s not my money” attitude, you have the perfect recipe for the misuse and overuse of healthcare that drives up costs. Traditional health plans with lower deductibles and cushy copayments mask the reality of healthcare cost. Consumers think a routine doctors' visit only costs $20.00, although the reality is closer to $200.00. High deductible health plans (HDHPs), however, make it much more difficult to hide from this reality and encourage us to implement a financial plan for our healthcare.

We can explore this by comparing a hypothetical consumer decision-making process and experience from employee benefits enrollment to healthcare consumption.

The traditional health plan participant is a passive recipient of care who lacks an understanding of how his medical decisions impact his personal financial well-being and has little incentive to change his behavior. For the HDHP participant, however, active healthcare consumerism guides the experience because he is able to see and feel the effects of his healthcare decisions in his own pockets.

If we expound this experience from a single consumer into broad-based healthcare consumerism, each of those seemingly small financial decisions can lead to big healthcare cost savings and a more successful employee benefits system in the future. Of course, HDHPs are not for everyone. Likewise, we cannot make all healthcare decisions in advance on the reliance of thorough quality of care and price comparison research. Yet, for a significant portion of healthcare decisions, HDHPs combined with informed consumers can make a big difference in the industry.

As consumers, we have to embrace a shift in our thought patterns that involves no longer viewing our physical and mental well-being and financial well-being as mutually exclusive. The employer paternalism of the past no longer works for the healthcare landscape of the future and OneDigital will stand with you as you tackle some of these changes.

Contact your OneDigital representative for ways to create a benefits plan design that enables your employees to become more informed consumers.

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