Is employer-sponsored health insurance dead?
With many unknowns about the future of healthcare policy in this country, some might wonder: Is employer-sponsored health insurance dead? I believe it’s broken, but it’s not dead. To the approximately 60 percent of Utahns who get their health insurance through their employer (the highest percentage of any state), this may be a relief. But there’s much work to be done to make employer-sponsored health insurance (or any health insurance) work like it should in 2020 and beyond.
Originally, employer-sponsored health insurance was the answer to a perfect storm of post-World War II problems—a clever way to circumvent labor shortages and wage freezes gained a political foothold that hasn’t been dislodged. For both employers and employees, the mid-20th century model has become too costly, confusing, and unnavigable for today’s consumer-driven economy.
It’s time for change
Healthcare operates by its own rules. There is possibly no other industry so removed from the power of the marketplace and consumer control. Employers and employees have been caught in an unnecessarily adversarial fight about who will pay the exorbitant costs. In many ways, we’ve fundamentally lost sight of the purpose of insurance and the role of consumers in making informed healthcare choices for themselves.
Employers, this is not your fault. Poor insurance design has forced you to choose between meeting budgets or shifting cost increases to employees. This is not the fault of employees either. They’ve been forced to relinquish control of their own healthcare decisions and in the process have lost the consumer power that, in other industries, lowers costs and drives improvements.
It’s time to change the design and build health insurance around the common goal of employers and employees: a great benefit that sustainably controls costs and provides choices among high-quality treatments and providers. We need a modern health insurance design that creates an intuitive fit between people’s health insurance and the way they actually use healthcare.
Give employees tools to make informed choices
When a health plan provides the tools needed to see provider and treatment options for conditions in real time, as well as cost and quality comparisons, people are able to make decisions that are right for their unique circumstances. Advancements in data and AI have made it possible to give consumers tools that give them more awareness and control over how their care decisions impact their health, their pocketbook and the health plan group overall. Informed choice is incredibly powerful. Recent benchmark data shows that people are more likely to choose surgical alternatives and less expensive sites of care, when cost differences that expose value are presented up-front and side-by-side.
When people are given a navigable health insurance experience that allows for informed choice and cost certainty, employers have a significant opportunity to increase workforce satisfaction and sustainably lower healthcare costs. And, most importantly, people are empowered to take control of their health.
Bring visibility to quality and value in care decisions
People deserve to be able to shop for healthcare to solve their conditions the same way they shop in other parts of their daily lives. They should be able to see treatment options for the conditions ailing them, as well as a list of providers who are known to effectively and efficiently treat each condition. They should be able to instantly see their options and compare prices from the palm of their hand. All the information needed to make decisions that are right for their unique circumstances should be available online in real-time.
People also deserve to know that surgical interventions aren’t always the best treatment options—and prices should reflect that. Take knee pain as an example. It makes sense to put more subsidy into physical therapy, chiropractic care and pain injections. And less subsidy into knee arthroscopy (a surgical procedure with high cost variation and questioned rates of efficacy). But if it’s decided that someone should have a knee arthroscopy, their health plan should help them find a provider who has good outcomes at a fair price.
Eliminate affordability barriers
Deductibles were originally introduced to employer-sponsored health insurance to create shared member burden—to give employees more “skin in the game.” The hope was that people would select and consume care more thoughtfully if they had to cover all costs out of the gate. But people can’t price shop if they don’t know the prices. And without the money to fund care 100 percent until a deductible is met, many people skip or postpone care. A quarter of Americans skipped necessary medical care in 2018 because they were concerned they couldn’t afford the costs.
When barriers like deductibles, coinsurance, cost uncertainty and narrow networks are eliminated, people have the freedom and flexibility to use their health benefit the way they personally need to. A health benefit that a person can’t use isn’t actually a benefit.
Consumer-centric health insurance is the future
Regardless of what happens with US healthcare policy over the next four years, cost will continue to be a concern for Americans. And regardless of the payer system that’s in place, nothing will change unless there’s a fundamental shift in the culture of how we view healthcare in this country. We need to focus on achieving health—not just treating sickness.
Change starts at the financing level—with health insurance. Health insurance that is focused on conditions, treatment and health. Health insurance that is aimed at improving and maintaining health. Health insurance that makes more effective, efficient providers and treatments cost less. Health insurance that understands and reflects consumer value.
Employers, the health insurance industry hasn’t served you well. But we now have an opportunity to design better—an opportunity to stop pitting you against your budgets and employees.
We have the power to fix employer-sponsored health insurance. It starts with a consumer-centric mindset.