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Engage Consumers August 19, 2021

Are Employees Ready to be Better Healthcare Consumers?

Employee Benefits Consultant, Marsh McLennan Agency
Key Takeaway
Only 4% of Americans can correctly describe terms such as deductible, copay, coinsurance and out-of-pocket maximum - @Policygenius #OWHealth

Editor's Note: This article was original published by Marsh McLennan Agency.

What if employees were better healthcare consumers? What if they had the tools they needed — as well as the desire — to actually shop for the best healthcare prices along with what was best for their health?

Increasing awareness of the disparity between healthcare costs — hospital procedures, clinic visits, lab work, prescriptions and more — along with the availability of accurate pricing data and increased patient cost sharing (i.e., higher deductibles) could help create more active healthcare consumers.

That said, a study conducted by policygenius.com discovered that only 4% of Americans could correctly describe terms such as deductible, copay, coinsurance and out-of-pocket maximum.

Consumers simply haven’t been trained to focus on price shopping for healthcare. Weighing one price against another to make a more informed decision is not something we all do automatically, the way we do for virtually any other product or service. Millennials in particular seem less interested in shopping for healthcare, as they believe they don’t really need it; Gen Xers with children are far more apt to want to compare costs.

The good news, according to a Harris Poll, is that 88% of Americans believe the government should require hospitals and insurers to disclose prices.

The healthcare system is getting closer to embracing transparency with a sequence of “pillars” that are or will be contributing to opportunities for consumers to fully see and understand healthcare pricing:

  • Advent of electronic medical records that gave consumers access
  • Legislation passed in January 2021 requiring full price transparency from hospitals
  • Advancements in technologies such as telehealth visits are making communication with consumers easier

Higher cost doesn’t necessarily mean higher quality

This may seem counterintuitive because we’re used to a higher priced product or service having advantages over less costly options. It may seem odd but more effective healthcare treatments providing better healthcare outcomes should actually cost less. In addition, costly choices plus less invasive options can be two key ways employees can save.

In fact, higher prices are often a sign of waste and inefficiency. The Institute of Medicine estimates that 30% to 40% of healthcare spending is wasteful. And it doesn’t produce better health outcomes.

Employees are becoming more involved in the cost of their healthcare

The pandemic has prompted many Americans to become more engaged healthcare consumers. This is good news for the system as a whole, including for employers who provide health insurance to anywhere from 40% to 50% of Americans. When people are better at buying healthcare, they have the opportunity to be healthier and to save themselves and their employers money.

Will new options change healthcare shopping habits?

Several new players in the healthcare arena could have an impact on pricing as well as how consumers access and shop for healthcare.

Amazon Care and Wal-Mart Care Clinics provide primary and preventive care services in a few selected markets. Although neither take insurance, Wal-Mart provides easily accessed prices.

Health insurers that have acquired proprietary clinic networks could ultimately be a force in terms of pricing transparency, but currently they simply provide the convenience of having care and insurance under one roof.

However, innovative health insurers such as Bind could be a large part of the answer to how we can better shop for healthcare. Bind offers members total price transparency as well as education as to what those prices mean, especially when there is often such an enormous gap between pricing at one facility versus another.

Closing Thoughts

Price transparency is merely the first step in helping consumers make smarter choices about their healthcare. As the industry takes steps to become more like the retail industry, employers and insurers have an opportunity to engage and fulfill the great healthcare expectations of the employees and consumers.

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