We hold a belief that today’s health care challenges are rooted in the fact that the employee (aka, consumer) has little to no accountability or skin in the game with regard to their health care selection or utilization. In the eyes of an employee, their health care decision was made by someone else and handed down to them – they had very little say in the type of plan that may work best for them. This isn’t the fault of anyone in particular, but it has been the standard operating procedure for group health insurance for as long as anyone can remember. Employers worked with their broker who worked with the carrier in a very traditional Business to Business (B2B) model. The challenge with the B2B model is that the end user (aka, Consumer) is noticeably absent and yet they are the ones that ultimately drive cost and utilization. This is a foreign concept in any traditional sense of free enterprise and, in my opinion, is a key reason why we have a health care crisis on our hands. The solution to this was identified many years ago and has gone through several attempts to bear fruit – without a great deal of success. The solution is to drive consumerism by educating and engaging the employee/consumer in the purchasing of health care. Several of these attempts have been self-directed/build-your-own health plans, High Deductible Health Plans/HSAs, stronger decision support tools within a benefits administration system, and several others. While each of these were beneficial and moved the needle slightly, they all failed in their attempts to create an environment where the employee had direct accountability to purchase health care instead of selecting what someone else had already purchased on their behalf. However, the most recent attempt to drive consumerism presents the best opportunity to truly engage the employee in a more traditional consumer-driven process to purchase health care – the Private Exchange/Marketplace. In these marketplaces, the traditional paradigm has been shattered and the employee/consumer takes the lead role in purchasing a plan that best meets their needs. The early exit poll results from these programs help tell the story.
- 80% of employees purchasing health care through a Private Exchange are buying down on medical. What does this data point tell us? Employees may have been over-insured for years and when they are able to make a decision for their own family (by using robust decision support tools made available through the Private Exchange) they choose less health insurance and use their extra company subsidy for other needs (see next bullet); and
- Employees are purchasing ancillary insurance at a rate far greater than they did when their employer was making the decisions on their behalf. Again, these decisions are being made that are unique to an employee’s situation and are guided through the available decision support tools and education.
With the introduction of Private Exchanges to the group insurance market, a new paradigm has emerged — one that extends the chain from B2B (business to business) to B2B….2C (business to business to CONSUMER). This seemingly small extension to the consumer may serve as our best chance in addressing the root cause of our health care challenges and produce a new consumer-driven marketplace!