Benefits and Compensation

Q&A: Forming Lower-Cost, Higher-Value Health Plans

What do your employees really want from their health plan? Answering that question can help you deliver a better benefit and save a lot of money by focusing on what is really needed.

Stethoscope over the dollar bills.

Here to discuss this and other health plan-related topics is expert Tony Miller, founder and CEO of Bind On-Demand Health Insurance.

HR Daily Advisor: What’s your experience been working with companies that seek alternative health plans? What advice do you have to relieve the tension with regard to health benefits?

Miller: The business leaders I’ve worked with seek modern solutions for their employees in today’s digital world. They’re motivated to confront the deeper issues of traditional health insurance models that fuel the rising costs of their health insurance plans and employee dissatisfaction.

When it comes to workplace tension, HR leaders often struggle to balance company financial demands with what’s best for employees—a health plan benefit that helps them offer an attractive health benefit along with cost containment. Employer costs are rising, yet cost-shifting has reached a breaking point. Both sides are maxed out. And employees need health benefits they can actually afford to use. It is, after all, supposed to be an employee benefit.

Most Americans don’t have $400 in savings to cover medical costs, but the average deductible is $3,000. This scenario leads to care avoidance. When care avoidance results in illness-related productivity loss, companies foot the bill for an estimated $530 billion. If you’re facing this lose-lose scenario, it’s a critical time to evaluate how your health plan design impacts the way employees utilize it.

Start by prioritizing your employees’ needs first. The consumer market listens to people’s needs for educated buying, price certainty, and an easy shopping experience. When people are buying a TV, they compare options and pricing on an app. When they need a ride, they locate one on their phone. Why should consuming health care be any different?

If you design your plan around empowering your employees, they’ll make better care decisions, and that drives costs down for everyone. If business leaders hope to be successful in improving their health plan offering, they must face the issues of their current plan head on and eliminate barriers to healthcare consumption and provide tools to empower effective and efficient health plan utilization.

HR Daily Advisor: What do employees really want from their health plan?

Miller: Employees want equitable, affordable health care. It’s that simple. They want to be able to make health choices in their best interests based on information tied to their unique situational needs. We conducted focus groups to unpack what that means for people. You know what consumers said they want from their health plan? Four things.

First, they want a simple “yes” or “no” answer to “is it covered?” It’s a pretty basic request that the health insurance industry should be able to deliver with the data sets and existing technology. Next, they said they are done with barriers like deductibles. When we eliminate deductibles, we are removing a major barrier consumers face in being able to make the best decisions for their health. They also said they want to know the cost of care up front and the ability to save money. If consumers are aware of quality and cost of care in advance, they can make educated healthcare decisions that fit their unique circumstances. Our results show it saves on costs for them and for employers, too. Finally, they want to be able to adjust their coverage when their needs change.

HR Daily Advisor: Why should HR executives consider plans without a deductible?

Miller: Deductibles aren’t doing what they were originally meant to do, which was to encourage people to use health care more deliberately. There are dysfunctions that deductibles create: 1) People don’t know costs of treatment options until after receiving care, and 2) deductibles mix care choices as if they are the same. Deductibles strain employees and cause inefficiencies that drive up costs.

Nobody benefits from deductibles. They drive costs north no matter how consumers respond to them. When consumers avoid care—because of their deductible—until they need to receive high-intensity services, that’s costly to employers. And when people meet their deductible and begin consuming feverishly, costs also rise.

Providing the right incentive for care consumption comes from providing clarity around the best treatment options and linking that to costs employees can manage. Eliminating the deductible is important to ease tension in seeking care and allows consumers to focus on using tools that actually empower them to choose their health care more deliberately.

HR Daily Advisor: What are the benefits of sharing the cost of care up front? What behavioral changes happen?

Miller: Our data show that when employees are aware of the exact cost of treatment across a range of provider options, they choose the most cost-effective option 40% more often than people on traditional plans. These behavioral changes are helping employers curb healthcare costs as much as 20%. Over-utilization is not the big problem—it’s the wrong utilization.

Instead of pricing coverage as one-size-fits-all, prepurchased coverage during enrollment periods, on-demand health insurance prices coverage in real time and allows consumers to see the cost variations of their provider options before receiving care. As consumers search for and choose affordable services in their market, price variation and excessive prices dissipate, and we can start to eliminate treatments that offer no clinical value.

HR Daily Advisor: What can be done to increase utilization of lower-cost pharmacies?

Miller: The key is to give consumers options—both where they fill prescriptions and for the knowledge of the cost differences among their options. Our experience shows that when consumers have access to this information, they avoid higher-cost pharmacies and select a lower-cost option 65% of the time. On traditional plans, members only select lower-cost pharmacies 20% of the time. When you make it easy to compare and navigate the available options, users make better choices.

With open enrollment season upon us, now is a great time to review your benefits options and challenge the status quo. If it’s time to seek an alternative health plan for your employees, it’ll need to address the underlying issues in your current plan’s rising costs and internal dissatisfaction. Your new offering should break down barriers to care, empower informed decision-making, and encourage behavioral changes that benefit your employees and your company.

Tony Miller is the founder and CEO of Bind On-Demand Health Insurance.