Thought-Leaders newsletter

Perspectives on a selected key topic September / October 2019

hat are the stakeholder implications going forward arising from employee health plan cost sharing increasing at twice the rate of wages during the past decade?”

Lindsay Resnick
Executive Vice President,
Wunderman Thompson Health

‘Stakeholder implications’ at a time when a family’s financial healthcare burden is growing at a rate that far outpaces their wages can be summed-up on one word: OOPS…Out Of Pocket Spending. As corporate stakeholders – providers, payers, pharma and employers – joust in a ‘Game of Thrones’ battle over payment schemes, network configurations, price manipulation, and bureaucratic machinations, what about the ultimate stakeholder, America’s healthcare customer. For them, healthcare has become an amalgam of medical, financial and lifestyle transactions where they’re searching for value and grappling with mind-numbing personal decisions.

Adding to consumers’ confusion is healthcare’s political noise: Medicare-For-All, surprise medical bills, opioids, and prescription drug costs. However of most concern is the buzz around invalidation of the Affordable Care Act. For many this means taking away protections for pre-existing condition exclusions, elimination of premium subsidies and pulling back Medicaid expansion. The result is returning the nation to pre-2008 levels of uninsured that hovered around 50 million. But, let’s not forget there’s an election coming. In the 2018 midterm election over 40% of voters said healthcare was the top issue facing the country far ahead of immigration and the economy. Stay tuned…and don’t forget to vote!

Here’s a few stats to provide context for today’s healthcare consumer stakeholders:

$28,386 is average cost for family covered by an employer PPO plan
47% of commercially insured population have a high deductible health plan
40% can't afford to pay for a $400 emergency expense
51% of nonelderly population had at least one pre-existing condition
54% delay or don’t get health care because they can’t afford it
66% of all bankruptcies are tied to medical issues

In an ecosystem defined by Out-Of-Pocket Spending where consumers are asked to take more personal responsibility for financial (and clinical) decisions they need guidance making smart individual choices. These customers want…and need help from trusted sources. Healthcare has become a blur where everything starts to look the same: products are standardized, provider networks overlap, prices are available online, and the distinction between payer and provider has faded. Markets are commoditized, traditional sites of care disintermediated, and brands neutralized. Consumers are confused and frustrated with healthcare’s jumble. From their perspective, what they want from healthcare is simple: be there when I need you, communicate with me honestly, show some empathy, and do the right thing for my healthcare.

Winning healthcare brands are now inseparable from their ability to empower the customer and build a relationship of trust. They are reaching and connecting with every customer wherever they are in their healthcare journey. And they’re interacting with people on their terms, at the most appropriate touchpoint, with actionable content and through communication channels they prefer. Consumer centric healthcare organizations that demonstrate a respect for their customers’ time and individual needs will see deeper brand preference, greater engagement and improved loyalty. Relevant engagement at moments of need yields customer empowerment…and empowered members and patients have lower costs, better outcomes and better value.

Natasha Elsner
Research Manager,
Deloitte Center for Health Solutions

Health plans could do more to help their employer and member customers develop innovative benefit designs, navigate care options, and control costs.

Employer benefit surveys suggest there may be limits to how much cost-sharing employees can bear and a one-size-fits-all benefit design may not work for all.¹High-deductible plans—that have become a common benefit option—are blunt instruments: they can discourage utilization of both low-value and high-value services, and such plans can be particularly challenging for people with ongoing health care needs, as well as those with low and even moderate incomes.²

Even as employers are becoming smarter about benefit designs and reevaluating their approach to high deductible plans as the only option, many unmet needs remain.

It is usually after the fact that members receiving medical services realize the actual costs they are responsible for. People with large medical bills are typically left to their own devices to negotiate payment terms with providers – whether it’s for out-of-network charges or for services deemed not medically appropriate by their health plan. Perhaps, this is where health plans can offer support: help members understand their bills and negotiate fair payment terms. Furthermore, health plans may have an opportunity to design new services that anticipate rather than react to members’ needs. For instance, predictive analytics could help identify members who are likely to incur high expenses in the next 6-12 months or those with a new diagnosis. Care navigation, Center of Excellence programs, and second opinion services could be proactively offered to such members. Equipping members with these options and with the knowledge could help them make better decisions. A few other considerations include adherence support programs and drug benefit designs that help ensure access to maintenance medications for common chronic conditions and removing the barriers to care often rooted in social determinants.³

Helping customers in the time of greatest need may be the true expression of customer centricity.

1. John Tozzi and Zachary Tracer, “Some big employers moving away from high deductible health plans,” Insurance Journal, June 26, 2018, https://www.insurancejournal.com/news/national/2018/06/26/493273.htm, accessed September 25; Shelby Livingston, “Fewer employers offering high-deductible plans as only option,” Modern Healthcare, August 13, 2019, https://www.modernhealthcare.com/insurance/fewer-employers-offering-high-deductible-plans-only-option, accessed September 25.
2. Kenneth E. Thorpe et al, “The challenges of high-deductible plans for chronically ill people,” Health Affairs Blog, April 22, 2019, https://www.healthaffairs.org/do/10.1377/hblog20190416.47741/full/, accessed September 25; JoNel Aleccia, “Insured but still in debt: 5 jobs pulling in $100K a year no match for medical bills,” Kaiser Health News, December 28, 2018, https://khn.org/news/insured-but-still-in-debt-5-jobs-pulling-in-100k-a-year-no-match-for-medical-bills/, accessed September 25.
3. Josh Lee, Melissa Majerol, Jeff Burke, Addressing the social determinants of health for Medicare and Medicaid enrollees: Leading strategies for health plans, Deloitte Center for Health Solutions, 27 February 2019, https://www2.deloitte.com/us/en/insights/industry/health-care/applying-social-determinants-of-health-mcos.html, accessed September 25.

Dudley E. Morris
Senior Advisor,
BDC Advisors

Compared to the press attention paid to Medicare-For-All, the escalating cost of large employer health plan insurance for working families is something of an elephant in the room in terms of the current political discourse. There are some 150 million non-elderly people who have good coverage and generally want to keep it. Last year the average coverage for a family rose 5% to $20,576 according to the 2019 Kaiser Family Fund Survey of Employer Health Benefits. Over the past decade health costs incurred by employees and their families have increased by 18% compared to an 8% increase in inflation and 12% increase in wages. The average family in a large employer plan will now pay $5,000 in premiums and an additional $3,000 in out-of-pocket costs. On average employees of large firms contribute about 1/3 of their total cost of coverage—20% in terms of premiums and an additional 13% in terms of cost sharing. According to the KFF analysis, families now pay 67% more for their health benefits than they did a decade ago while wages have only grown 26%. But employer plans still seem like a pretty good deal if you need sick care: since 2003 employer plans have covered approximately 85% of employee costs, which explains why Medicare-For- All proposals advocating the elimination of the private insurance industry have not gained much traction.

Still, the total cost of care in terms of premiums and out-of-pocket expenses for a family covered by a large employer plan can put a dent in most family budgets. It is not surprising the UAW workers on strike against General Motors are fighting tooth-and-nail to preserve their health care benefits during current negotiations: they pay about 3% of their health care costs.

As of 2019 the recent Kaiser survey found no major changes in the market for employer-sponsored plans. But the efforts of large employers to stem rising benefits costs has grown increasingly sophisticated: The National Business Group on Health’s 2020 Large Employer Survey indicates employers recognize healthcare is delivered locally for the most part, and that change efforts are often not scalable. As a result, employers are turning to market-specific solutions, particularly in terms of managing prescription benefit costs and high cost claims. Approximately 49% of employers plan to pursue an advanced primary care strategy by 2020 with another 26% considering one for 2022. There is similarly strong interest in ACO’s and High Performing Networks with nearly a third of large employers planning to implement either or both strategies in 2020, a percentage that could double by 2022 . While most employers have reservations on Medicare-For-All--- thinking a public option would raise costs and reduce quality--- nearly 55% would consider expansion for people 50 and older—but not those under that age. This fallback position might provide the gist of a solution to their rising healthcare costs---and would be welcome news for many older employees who want to retire early. At a minimum, it seems certain that there would be broad-based business support for government intervention in the negotiation of prices for drugs above a certain price threshold, or possibly a stop-loss program for drugs above a certain price threshold. Even if the political support for some type of public option fails to materialize, the focus of large employers on stemming their rising benefits costs is certain to continue.

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