Benefits and Compensation

9 Ways to Reimagine Failing Health Plans

Here’s how it should work for someone covered by an employer-sponsored health plan: You work hard. You need health care. You visit the doctor, who identifies a current or potential issue and provides the care you need. A month later, you aren’t agonizing over whether you should pay the rent, send your kids to summer camp, or pay your medical bill.

But sadly, that’s far from how it typically plays out. Many patients face mountainous debt, sometimes for just one visit or test, despite having employer-sponsored coverage—coverage that costs them and their employers more every year. And even while employers grapple with rising premium costs to put coverage in place, more than half of American families with job-based health coverage hardly use their plan, avoiding doctor visits and leaving prescriptions unfilled.

The health plan industry is failing in its one job: to ensure members have coverage for even the most routine healthcare needs. That means not just an insurance card but also actual financial coverage for—and access to—necessary care. Yet a recent story in TIME revealed more than 70% of Americans (based on a Harris Poll) feel the healthcare system fails to meet their needs in at least one way.

By far, the poll cited affordability as the biggest barrier to care (61% of respondents), followed by access to timely appointments, limitations of their coverage, and the healthcare system’s overall focus on illness and injury rather than preventive care and wellness.

And over 90% of respondents in Centivo’s 2022 Employer & Broker Health Plan Trends Survey agreed: The health plan industry needs an overhaul. Rising healthcare costs impact employers’ ability to add jobs and raise wages, with no noticeable improvement on health or quality of life to show for it.

What’s Fueling the Failure

Despite this sweeping thumbs-down, traditional health insurers are faring tremendously well, with billions in quarterly profits, so don’t expect momentous innovations from that side of the house. Any pivot in the affordability direction needs to address the untenable status quo, which allows:

  • High prices charged by high-cost hospitals and nonsensical variations for identical procedures, with no correlation to quality;
  • A system that rewards high utilization that keeps beds and machines full;
  • Mandated medical-loss ratio targets that set the ability for administrative expenses and broker commissions to go up as medical claims costs rise; and
  • The robust growth of major insurers’ pharmacy benefit management (PBM) divisions—growth that far exceeds their health insurance units.

Reimagining for the Win

In the indomitable words of George Costanza, the industry needs to do “the opposite” of what led it here. Change is only going to happen by reimagining the system with new collaborations and counter-detailing status quo thinking, by putting value over volume, by choosing to make health plans radically affordable, and by rewarding providers for putting their patients first. Here’s how to get there:

  • Embrace the responsibility to challenge the healthcare status quo. Health care is often the second-largest company expense after payroll, so improving plan value and quality benefits employees, as well as the company’s bottom line. After all, the biggest risk of change is not changing at all.
  • See what you’ve been missing. If your company has been feeding cash into ever-rising fully insured premiums, consider the insights and control a self-funded plan provides, like the data to dig into what’s driving costs, the ability to build a network of high-value providers, choices to design a plan that’s the right fit for your workers, and access to savings accrued by smart decisions.
  • Promote the primary care relationship. More than 70% of Harris Poll respondents said they want stronger relationships with their providers, and more than 65% believe their health would improve if they regularly worked with a trusted provider. Primary care-centered health plans nurture that critical relationship and set a foundation for better outcomes and lower costs.
  • Demand transparency from PBMs. As long as PBMs aren’t incentivized to be transparent, they will continue to wring prolific profits out of the system.  
  • Explore virtual primary care. When built into a health plan offering, it’s an attractive option for those who want the flexibility of virtual visits but the care continuum of a strong primary care physician relationship. It also addresses the failing grade for timely appointments and access issues by surmounting geographic, physical, and scheduling barriers to care.
  • Offer a massively simplified health plan. Eliminate the gymnastics of deductibles and coinsurance, and take surprises out of the process. Offer a plan the average American can understand and afford.
  • Realign incentives. Incentivize value across employers, employees, and providers. Primary and value-based care can be a win-win-win. Setting more of your plan to be funded through fixed compensation, such as capitated or sub-capitated contracts and/or direct care arrangements, mitigates any concern of artificially high utilization.
  • It’s the prices, stupid. Make it a point to work only with providers that demonstrate quality care at a fair, transparent price. There’s no room for inflated costs and little to show for it.
  • Find partners who get it. Connect with industry groups for benchmarks, and hold your advisors and consultants accountable.

Whether you’re a benefits manager, broker, provider, or insurer, it’s hard to swallow being part of an industry that’s perceived to be failing 70% of Americans. We can do better, and we will, but it requires identifying and recognizing the fact that for all we’ve tried over the years, we’re still in a place where the average American feels they’re not supported and don’t trust the system. Let’s make it the opposite.

Ashok Subramanian is Founder and CEO of Centivo.

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