2015 February

The Benefit Gap

Purchasing health insurance is kind of like purchasing a specialty light bulb. There are more bulb options than you can ever imagine. Standing in front of the wall of bulbs once you’re at the store, you’ve probably realized that it’s next to impossible to pick the right bulb without knowing the model and wattage needed.

If you’ve used an exchange or picked your insurance from a bunch of policy summarizes, you probably felt that same overwhelming feeling as standing in front of the wall of bulb options and likely thought there has to be a better way.

Exchange and Brokers:
Exchanges and brokers narrow the options so that you only have to look at part of the wall. The problem is that the criteria used to narrow the options basically tell you which policies you can afford but not necessarily which plans are best for you.

Income, age and location are the primary criteria being used to filter the options on the exchanges. Age is a risk adjustment to help insurers price the policies, income addresses your ability to pay for health insurance and location provides all of insurance policies offered in your city. In other words, it’s like seeing only the bulbs that you can afford to buy but they may or may not fit your light.

Healthcare Jargon:
Model numbers and wattage don’t help if you don’t the model and wattage needed. Similarly, the use of healthcare acronyms don’t help you pick a policy when you don’t understand what the acronyms mean.

Exchanges and policy summarizes are littered with healthcare acronyms such as HSA, PPO, HMO and EPA. Some of the acronyms have been around for a while but how they are being used is changing and evolving within the healthcare industry and those newly covered probably don’t have a clue what they mean. The problem is that all of the acronyms affect the cost of healthcare and impact the consumer experience.

Comparable Plans: 
How do you pick a bulb when you don’t know the model and wattage? Chances are you guess. You pick the new bulb from your memory of the old bulb and take it home to try it out. That’s kind of what people do when picking health insurance. They use past experience to find a policy like their old one or a better one if the last one didn’t meet their needs. 

However, the only thing comparable about the plans now are the names and the benefit terms included. Some benefit terms specify a copay or rate of coinsurance and others set a maximum benefit. Consequently, there is no mathematical way to know which term provides the better benefit.

Few people are able to figure out which benefit is better because it takes a lot of work just to get the information needed to do it. So most people guess and hope for the best. Needless to say, emotions flare when they figure out their guess was not so great because unlike a light bulb, they’re stuck with the policy for an entire year.

To provide the math at time of purchase, more information is needed about each insurer’s network. Most insurers have to contract with healthcare providers (physicians, hospitals and others) for services needed by their members. The contracted rates are negotiated and may be different from provider to provider.  For healthcare providers not included in the network, the provider’s charges are needed to calculate the benefit.

The Point:
Healthcare consumerism starts with the selection and purchase of the insurance policy not healthcare services. If consumers don’t purchase the right policy for them, there is friction every time they use their benefits.  

With healthcare costs becoming a bigger part of the consumer budget, we need to make it easy for healthcare consumers to understand what they are purchasing and make better recommendations of policies to serve their needs.

About the Author: Shannon Smith is a healthcare strategist with over fifteen years of experience helping companies achieve greater success.

Let’s Change the Game

Medical risk is like the hot potato that keeps getting passed around between the government, employers, insurers and providers.  Similar to the hot potato game, whoever ends up holding the medical risk usually looses the game.

The responsibility for managing medical risk includes the responsibility for managing a big pot of money to administer claims. Medical billing and collections, as described by Jonathan Bush, founder and CEO of Athena Health, is one of the stinkiest parts of healthcare that few providers do well. So basically by transferring risk to providers they end up with more of the stinky stuff that they haven’t been able to manage well. That alone give me heartburn because the stinky part is critical for monitoring the overall health of the risk pool and their organization.  However, there is even more to the story.

Risk + Money = the Risk Pool:

Healthcare trends like the aging population and the number of obese and overweight people are the risks that suggest a need for a very large pot of money to pay for healthcare. Unfortunately for providers, all the other players in the hot potato game are basically saying they’re tapped out. So healthcare providers somehow have to figure out a way to do more with less. In other words, they are getting less money than they need to pay all the expected claims. 

Do More with Less:

Many providers are accepting the challenge to do more with less even though it’s never been their strong game. Most have been focused on delivering the care patients want regardless of cost because historically, they have been able to make enough from some patients to cover all the bills for everyone. So at this point no one really knows how to do more with less successfully.

Building regulations, staffing regulations and lack of pricing transparency for medical supplies make it challenging to cut costs that companies in other industries routinely cut. Some savings will be realized if providers share records and reduce the amount of duplicate tests but the bigger savings come from not delivering care at all. Providers have yet to figure out how to say “No” to patients who want medically unnecessary care without getting a bad review and how to get people covered by their risk pool to live healthier lives.

Medically Unnecessary Care:

People who are really sick rarely think care is unnecessary even if a treatment has a very slim chance of working. Who doesn’t like to think they will be the exception to the rule? Isn’t that part of positive thinking? That’s what makes coming up with care guidelines so difficult and hard for providers to adhere to. Saying No or No unless you pay for it upfront is hard for all the players. Insurers did a better job of playing the bad cop because they didn’t have to face their member and tell them the bad news or work with them day-to-day.

What healthcare consumers need to understand is that healthcare insurance doesn’t mean covered for everything and anything. Few healthcare consumers read the fine print of their policies before they need to access the benefits – and unfortunately, that’s when the frustration begins for everyone.

Live Healthier:

There are a lot of people in this country carrying too much fat. Providers tippy toe around the issue by telling patients they are at risk for disease and/or by letting them know their BMI measurement is beyond the healthy range. You can only imagine that some patients don’t really see the problem with a point or two beyond normal and why some patients are not connecting the dots or getting the right message about fat. Fat causes a lot of health problem that are costly to treat and makes it hard for providers to do more with less.

Wearables may help connect the dots for some healthcare consumers. The latest technologies measuring our motivation, movement, sleep and food consumption can help us develop awareness, establish a baseline and monitor metrics during periods of physical change.

The problem with wearables now is that they are not sticky enough without a financial incentive to motivate the healthcare consumers who needs to loose weight and they are addictive for people who are already extremely active. Both groups are problems for healthcare providers trying to do more with less.

The Point:

There are a lot of questions left to be answered about how to make it all work so that providers can do more with less and patients get the care they need and want. It’s going to take some more honest conversations and fresher thinking to change the game.

The one thing we know now is that everyone can help by eating a healthy diet, exercising and living an active life.

About the Author: Shannon Smith is a healthcare strategist with over fifteen years of experience helping companies achieve greater success.