Consumer Directed Health Plans Aren’t Always Consumeristic

Rising health care costs and the advent of digital tools has made health care options more accessible and pushed the benefits industry toward a consumer-centric and retail-like model, to both the benefit and detriment of employees.

Speaking during a recent webinar hosted by Alegeus, John Young, senior vice president, consumerism and strategy, warned in no uncertain terms of the potential “dark side of health care consumerism.”

As Young explained, over the past two decades, rising health care costs and the advent of the digital era have made a greater number of health care options more accessible and pushed the benefits industry toward a more consumer-centric and retail-like model. This has resulted in the possibility of employers creating more highly personalized and individualistic benefits options from which employees can select and discriminate based on their particular budget and needs—hence the happy image of  “consumerism.” 

“However, all too often, these solutions are implemented under the mere guise of health care consumerism,” Young suggested. “In reality these solutions often are not actually set up to successfully deliver upon the goal of empowering Americans to get the best value for their health care dollars. In other words, not all consumer-directed health plans are truly consumeristic.”

On Young’s analysis, in order to empower consumers to take control of their health care finances, benefit plans must be designed to do more than shift costs. They must be designed to supply real support to participants, both financially and in terms of choice architecture.

“A plan design can be coined ‘consumer driven’ without giving the consumer any added value or chance for success,” he warned. “These plans are typically underfunded by the employer and result in an unaffordable cost shift to employees that can quite literally impede consumerism from taking hold in the market.”

Young further observed that “human nature causes employees to be sensitive and even resistant to change.” The result is that consumers, broadly speaking, tend to stick to the familiar, and this can result in employees continuing coverage with an existing plan that doesn’t necessarily deliver the best value for the individual’s current needs.

“Employers must be purposely disruptive in their benefit and employee engagement strategies,” Young suggested, “breaking down objections and barriers, with benefit options that deliver equitable value to their employees.”

An additional challenge is that employers may not have the know-how to increase employee engagement on their own.

“Consumer health and financial fluency is notably low, and according to Alegeus research, more than half of employers are asking for support to help better engage and educate their employees,” Young concluded. “It is imperative that all benefit solution providers, advisers, health plans and benefit administrators have strategic conversations with employers and provide access to decision support tools and materials they need to empower employees in their health care.”

Young pointed to his firm’s addition of “Emma” to its mobile application as an example of the type of tool that can promote consumerism. The voice-activated virtual assistant was designed to provide users with information about their benefit accounts and how to make the most of their health care money. “Emma” can be asked various questions about the full range of tax-advantaged benefit accounts including flexible savings accounts (FSAs), health savings accounts (HSAs), health reimbursement accounts (HRAs), limited purpose FSAs, dependent care FSAs, and commuter accounts. The virtual application can help users learn their account balances, previous transactions, annual contribution limits and more about the general makeup of their accounts.