When we talk to benefit managers across the country, one of their most common complaints is poor employee engagement with their health benefit programs. There have been a wide variety of approaches to engagement with the most popular over the past decade being the “consumer-driven health plan” or CDHP. The idea of the CDHP is to increase deductibles so that employees have more “skin in the game” and then to add transparency tools to enable employees to “shop” for lower cost care as they would other goods and services. Unfortunately, these programs have failed to deliver: employees rarely use transparency tools and even when they do the impact on cost and health outcomes is minimal.
At its core, the issue with the consumerization of healthcare is that even well-informed patients tend to listen to their doctor when it comes to the most important health decisions: what treatment they receive and where they receive it. Therefore, while the impact of consumer choices on patient outcomes is minimal, the impact of doctor choices is massive. Also, because employees are eager to see the best doctor possible, it is much easier to help the employee find a doctor than it is to intervene after they’ve already made a doctor relationship. For these reasons, at Garner, we believe employers who shift their focus from helping employees become better consumers of healthcare to helping employees find better doctors can achieve 10x higher engagement rates and 25% lower total cost of care. Below we start by showing the historical impact on plan costs from better consumer decisions versus better provider decisions. As you can see, the overall impact of provider decisions is significantly greater.
One of the reasons for the low impact of consumer decision making in healthcare is that patients tend to trust their doctor to make the decision on individual procedures such as where to go for a lab test, MRI or surgery. While it is possible to generate some savings by choosing a cheaper location for these procedures, according to recent studies by The Journal of the American Medical Association (JAMA) and Harvard, only 3-4% of patients use digital search tools and find a location that is different than the one their doctor recommends. By contrast, over 70% of patients now use digital search tools to find a new doctor.
Furthermore, even when patients know enough to search for a cheaper location for a procedure, traditional plan design gives them very little incentive to do so. As shown below, 85% of employees in high deductible plans who have a major episode of care end up spending through their deductible. Thus, despite the desire for employees to have “skin in the game,” the employees who spend most of the healthcare dollars end up with very little incentive to lower costs.
Beyond the issues with engagement, consumer-driven transparency tools do not solve the single biggest issue that drives plan cost: unnecessary and wasteful care. Over 40% of all patients in the US receive an unnecessary surgery or test during each course of treatment. This collectively adds 30% to healthcare costs each year. Consumer-driven transparency can help change the price of a surgery, but it does not help consumers understand whether surgery is the best treatment option for them. This is borne out in the data with employees in consumer-driven plans receiving almost the same percentage of unnecessary and low value care as those in low deductible plans.
So if consumerization is ineffective, what can employers do to improve plan performance? As we have written previously, we believe the key to improving health outcomes and lowering cost is getting more care to the best individual doctors. Top Doctors generate better health outcomes and are significantly less likely to perform an unnecessary surgery or test. Therefore, if we can help employees find these higher quality care when they start their care journey, there will be significantly better health outcomes and less wasteful care downstream.
How do we get employees to engage in seeing Top Doctors? It turns out that employees are already looking for more information on doctor quality. While employees are overwhelmed by shopping for individual health care services, according to studies by the Boston Consulting Group (BCG), their single biggest request from their health plan is more information on provider quality.
At Garner, we give employees the information they need to find a high-quality doctor and then reinforce this with the right plan incentives. Rather than rely on traditional deductibles, we structure an “engagement-based benefit” that covers the employee out-of-pocket if they use our tools to find a high-quality doctor. As shown below, in this design employees maintain their traditional health plan benefits, but receive additional coverage of their out-of-pocket when engaging to find a Top Doctor.
Because Top Doctors lower the total cost of care, this additional coverage more than pays for itself. Below we show the expected cost of the engagement-based plan design as compared to traditional. As you can see, the total cost to the plan is significantly less despite having richer benefits.
This benefit structure works for all employers, fully insured and self insured. Below we show the average spending by year for a 100-employee fully insured employer. An engagement-based benefit saves over $1 million dollars in the first four years while lowering employee out-of-pocket.
With healthcare costs set to rise at historically high rates post COVID, expenses are reaching unsustainable levels for many employers and employees. We believe that transitioning from a consumer-driven health plan to an engagement-based benefit presents an opportunity for employers to enrich benefits while guaranteeing cost savings. If you are interested in learning more about innovative solutions for your clients, feel free to contact us for a customized savings report.
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 Association Between Availability of Health Service Prices and Payments for These Services | Health Care Economics, Insurance, Payment | JAMA
 Who Uses a Price Transparency Tool? Implications for Increasing Consumer Engagement
 Examining A Health Care Price Transparency Tool: Who Uses It, And How They Shop For Care
 Health Care Consumerism Is Real—and Providers Need to Adapt