Can Consumers Change the Business of Health Insurance? – Hangout Participants Address Remaining Questions

On April 30, a multi-disciplinary panel of experts joined us for a Great Challenges live online event to examine health insurance’s shift from a business-to-business industry to a business-to-consumer one. Moderated by USA TODAY’­s healthcare policy reporter, Jayne O’Donnell, the group discussed what is working, what’s not, and what it all means for businesses, for consumers – and ultimately – for healthcare costs. If you were unable to join us, check out the recast below:

We had so many important questions that our participants were unfortunately unable to adequately address each during our one-hour event. We gathered our unanswered questions and posed them to our participants so that they could continue the conversation off-air. Here’s what Jennifer Sclar and Abir Sen had to say:

How does a person’s gender, race, age, or socioeconomic status affect the likelihood that they will take on the consumer role in insurance purchasing?

Jennifer: The likelihood that people will have to take on the consumer role in insurance purchasing will largely be dictated by forces beyond their control.  It is a role that people will increasingly be forced into, either because of the insurance mandate or because their employer is moving to a defined contribution model and away from a defined benefit model.  However, there are enormous differences among groups in terms of where they will shop for insurance, how they will shop for insurance, and how successful they will be in terms of procuring the best product for the best price.  There are issues and differences among groups that we know about and that we can use to try to maximize engagement across the board.

With respect to gender, we know that the overwhelming majority of health decisions are made by women.  Women are far more likely to select an insurance plan for their family, make doctor’s appointments and treatment decisions for themselves and their families (including their children and their parents), and deal with insurance company billing and eligibility issues.  With respect to race and ethnicity, we know that the States and the federal government have been far less successful in their efforts to reach out to minorities, and Hispanics in particular, than other uninsured groups, and this is a serious problem that needs to be addressed.  With respect to socioeconomic status, we know that the ability to pay for insurance, even when it is heavily subsidized, is a huge barrier to entry for many uninsured groups.  And, finally, we know that the older and sicker you are, the more likely you will be to sign up for insurance and that the long-term health of any insurance marketplace will depend on the ratio of older/sicker enrollees to young invincibles.  Successful strategies to address the particular barriers to entry for each group will be imperative to the success of the ACA, as well as the long-term trend toward the consumerization of health care.

What impact will more patients taking control of their insurance purchases and having “skin in the game” have on healthcare costs?

Jennifer: Complicated plan design and increased cost sharing will lead to demand for greater price transparency and clearer billing practices.  Patients will demand to know what they are being charged for, and the underlying costs.  This will likely lead to greater competition and lower prices for routine care, but could result in higher prices for more complicated procedures.

Abir: That’s difficult to answer without accounting for all the other variables — the overall health of the population, the advances that are being made in medical technology, and whether the advances increase or decrease overall cost, to name a few. If all of those variables are held constant, I would expect that consumers having more skin in the game would reduce healthcare costs due to the consumer making better decisions (such as getting generic substitutions over brand name drugs where possible, going to urgent care versus ER, and getting more preventive care).

Several of you have products that allow for plan comparisons. But what resources exist for people to learn basic concepts of health insurance?

Jennifer: Most plan comparison tools offer consumers basic definitions of key insurance concepts.  The problem for most consumers, including those who are highly educated, is that they are not really interested in learning about health insurance.  Most consumers just want to know that they will have the coverage they want, when they need it.  Health insurance is a very complicated financial product.  Clear Health Analytics tries to strike a balance between the few who will want to have a deeper understanding of insurance, and the majority who want to know what they are buying (e.g. Will my doctor be in network? Are my meds covered? Can I see a mental health professional?), and what it will cost.  We offer more in-depth information in pop-up boxes, which allows the screen to remain relatively clean and uncluttered.  Consumers can also visit healthcare.gov and the State Based Marketplaces to learn more about health insurance; they can also consult a navigator, assister or an insurance broker.

Abir: A well-designed product will obviate the need for people to understand the nits and nats of health insurance. In 2015, you don’t need to be able to code in order to use a computer. In the 1970’s, you did. The computer industry developed user interfaces that allowed the layperson to use their product quite easily. With the advent of consumerization, a similar evolution will happen in healthcare. Now, the interface may not be solely internet-based — it may incorporate human components through phone, chat and even in-person meetings. We don’t know exactly what that looks like yet. We do know that a user-friendly interface must and will develop.

With patients rather than businesses as consumers, insurance companies will likely need to change the way they do business. What will that look like?

Abir: As individuals become more accountable for their health care costs, they are also going to start holding the entities that provide them healthcare services more accountable. This includes insurers, providers, administrators, and so on. The pressure from consumers and the dynamic of competition will force everyone to up their game or risk losing the consumer’s business! All of this will have a positive impact on product design and customer service. Insurance companies will need to create products that people actually want to buy. Providers will have to incorporate technology to improve the consumer experience. As everybody focuses on making the consumer happy, we will truly get a consumer-centric system.

As an aside, we need to stop thinking about and referring to consumers in the healthcare industry as “patients.” It’s like calling everyone who purchases auto insurance an “accident victim.” This distinction is important because the way we think about consumers needs to incorporate both those who are actually sick and accessing healthcare, but also those who aren’t and are truly just buying insurance.

A few insurance companies (such as Florida Blue) have opened brick and mortar stores to sell plans and provide customer service in-person. Is this a trend you see taking off? Why or why not?  

Jennifer: This will be interesting to watch.  The medical loss ratio provisions of the ACA have made brokerage commissions increasingly unaffordable for insurance companies.  Commissions are characterized as administrative overhead, which means they must come out of the 15-20% of premium dollars that insurance companies are permitted to spend on administrative expenses.  Insurance companies are looking for creative ways to cut administrative costs, and brokerage commissions are an easy target. Moreover, many insurance companies are eager to get into the private marketplace space.  The marketplace will change many long-standing arrangements in the health insurance industry, including those among insurance companies and brokers, and those among brokers and consumers.

Abir: There is a reason why airlines don’t have brick and mortar retail stores. When people buy plane tickets, they usually want to compare across various airlines and see which one is cheapest and/or most convenient. Likewise, in a consumer driven market, individuals will want to compare across several insurance companies and find a plan that suits them the best. It doesn’t make sense for them to go to a store where they can only get plans from one insurer, being sold by that very insurer.

Each insurance policy has unique coverage constraints, co-pays, agreements with pharmacies, etc. How would you counsel a health insurance consumer to be a savvy shopper when it comes to doctors, hospitals and pharmacies so that they’re paying the least but still getting excellent care?

Jennifer: This is where access to data and innovative technology can really help consumers.  Clear Health Analytics, as well as others, have created – and will continue to create – cutting-edge technologies that can help consumers evaluate costs, availability of preferred doctors, facilities and prescriptions.  One of the major changes that the ACA brought was the elimination of underwriting for health insurance.  This makes health insurance ripe for a major change in the way it is distributed.  Brokers are no longer evaluating consumers for risk – it is merely a matter of matching the right consumer with the right policy, and that is a task that is uniquely suited for an amazing technology platform.  Beyond the insurance purchasing decision, Clear Health Analytics wants to help consumers use their insurance by offering information on treatment options, costs, outcomes, and quality.

Abir: 
I would advise them to get an advisor who is independent, who doesn’t work for their employer, who doesn’t work for their insurance company, and has no financial conflict. Come to Gravie.com – we are open for business!