The continued rise in healthcare costs has heightened the urgency more and more employers feel to bend the cost curve. Increasingly, they're shifting responsibility for these costs onto workers' shoulders. And the result has been a paradigm shift in U.S. healthcare, from an employer-centric "wholesale" market to a more consumer-centric "retail" market.
That's why consumers, given their growing financial responsibility, must play a more active role in their own healthcare. Significant education and support are needed to help them navigate these new, unfamiliar waters, so they can more effectively save money and pay for the cost of their care.
The numbers are alarming: The average premium for covering a family through an employer-based plan grew 73 percent from 2003 through 2013, and employees’ personal share of those premium costs jumped 93 percent, according to a recent Commonwealth Fund report.
These increases have far outpaced inflation, considering that over the same time period the median family income grew by just 16 percent. Are consumers prepared to assume these responsibilities? How effective are employers today in driving the employee engagement necessary to make workers more savvy healthcare consumers?
Working with a third-party research firm, my own company, Alegeus, recently conducted a study of over 5,000 consumers. We looked at numerous dimensions of consumers’ healthcare attitudes, behaviors and preferences for managing healthcare and making healthcare spending and saving decisions. The study found an overall lack of engagement by U.S. healthcare consumers, as evidenced by the following data:
- Only 50 percent of consumers surveyed claimed to want to play an active role in their healthcare.
- Nearly half of consumers surveyed didn't know what their healthcare costs would be this year, and 45 percent didn't understand what their insurance plans covered.
- Two-thirds said they were not confident that they were paying the right amount -- and 56 percent said they learned the costs of healthcare services after the fact.
Is more action by employers necessary? Yes. At a time when consumer engagement is more important than ever, here are the top four ways employers can better engage employees in their healthcare:
1. Don’t assume high levels of understanding and fluency
Research has proven that -- despite the fact that consumer directed healthcare benefit models have been around for some time -- many consumers still do not understand them. Only 30 percent of current HSA account holders could pass a basic proficiency quiz about how the account works -- and FSA participants did not fare much better.
Most employers think they’re doing a better job of communicating benefits information to employees than they really are. In fact, when employers who were surveyed looked at employee ratings on clarity of content provided, depth of information, variety of communications channels, level of content personalization and frequency of communication, they consistently rated themselves 15 percent higher than their employees did.
2. Don’t treat all employees the same.
A one-size-fits-all approach to employee benefit communication will not deliver optimal results. Segmentation and tailored engagement are critical to unlocking results. Develop a well-thought-out communications strategy that hits the right consumers with the right message. Make sure that strategy hits consumers at the right time and through the right channel, to dramatically improve engagement levels.
3. Leverage interactive tools and calculators to support consumer decision-making.
Consumers often have difficulty evaluating benefit and healthcare options because it’s hard for them to decipher how the various options would impact their specific healthcare or financial situation. Interactive decision-support tools can be powerful for delivering personalized information and tailored recommendations based on self-reported data.
These decision-support tools must support consumers throughout the plan year, not just during benefit enrollment -- as they are faced with critical spending and saving “moments of truth” at all times. The recent Alegeus research demonstrated that the majority of consumers surveyed found out the cost of a healthcare service only after the fact. And 66 percent of consumers said they weren't confident that they were paying the right amounts.
By offering consumers engagement tools that increase transparency and help empower them to play a more active role, they will be more likely to make smart healthcare spending and saving decisions.
4. Leverage incentives to drive behavior.
Data from the Centers for Disease Control and National Institutes of Health suggest that 70 percent of healthcare expenses stem from preventable or manageable causes. Therefore, behavior modification programs -- such as wellness programs -- offer tremendous potential to help employers reduce healthcare costs. Our research suggested that incentives -- particularly financial ones -- are a powerful tool to drive participation and positive outcomes.
Nor do these financial incentive amounts have to be large to be impactful: More than 80 percent of consumers surveyed indicated that they would be willing to participate in a wide range of organized wellness activities for a cost of $100 to $250 per year.
Employers have a tremendous opportunity to increase employee satisfaction and retention and improve the overall healthcare experience with a thoughtful strategy that combines comprehensive education, personalized communications, decision-support tools and incentives to drive behavior. In doing so, they will help their employees become more responsible and savvy healthcare consumers.