Helping Employees Make Consumer-Driven Decisions About Healthcare Spending
Consumerism in healthcare seems simple enough:
- Step 1: Employers encourage employees to enroll in high-deductible health plans (HDHPs).
- Step 2: Employees are provided access to a savings vehicle in the form of a health savings account (HSA) or a health reimbursement account (HRA), allowing them to directly control their own healthcare costs.
- Step 3: Employees review cost and quality to make more informed choices, and then access care when they need it for the best price.
- Result: Employers spend less.
But the reality is that employees face a lot of complex choices when it comes to their healthcare and they need employers to play a role in helping them make better, more informed decisions that save money for the employee as well as the company.
This is especially true at organizations with 100 to 500 employees who have historically known their workers intimately and really understood their day-to-day needs. But with workforce growth now being driven by younger generations, employers are tasked with addressing the concerns of multiple populations.
HDHPs offer the employer a way to meet this challenge and create people-centered experiences by providing the information, tools and resources that multi-generational employees require to make consumer-driven healthcare decisions – such as easy-to-understand processes and products, personalized experiences and human connections.
With consistent education and reinforcement, companies can influence employee decisions about healthcare, resulting in reduced healthcare spending and improved employee health. Here are a few things employers can do to engage their employees in consumer-driven healthcare.
Encourage Consumer-Driven Healthcare Behaviors
Many employers have begun offering HDHPs or HSA-compatible plans to reduce healthcare premiums and spending. In fact, employers are seeing average premiums for HDHPs with some type of savings option (HRA or HSA) that are considerably lower than the overall average premiums for all other types of plans for both single (6-8% savings) and family coverage (3-8% savings).1
But with increased out-of-pocket and upfront expenses on these types of plans, employees need to make informed decisions about how to use their health benefits as well as where they can get the best-quality care most affordably.
Ideally, offering an HDHP or HSA-compatible plan allows employees to save because the premiums for these plans are lower than comparable traditional plans and they pay for qualified health expenses at the same time. There’s also a natural incentive for employees to be informed consumers, gaining a deeper understanding of the cost of care, alternative pharmacy costs and evaluating providers for quality and costs.
However, employees don’t always capitalize on these built-in features, so encouraging the right behavior is key to helping employees maximize their benefit. Because employees generally need to pay out-of-pocket for coverage or co-pays until they meet their deductible, which can be considerable, the right plan structure can encourage employees to make better healthcare choices and spend their healthcare dollars more carefully.
These structural mechanisms can include “savings options” and strategically arranged supplemental benefits, such as critical-illness and hospital indemnity plans. This newest generational workforce will be the first to potentially maximize these wealth-building accounts and other supplemental benefits to their fullest extent.
Employers can help employees navigate the healthcare system by providing access to information about their health network options for both affordability and quality of care.
For example, MRIs at a freestanding clinic are generally less expensive than those performed at a hospital or a hospital affiliate. This difference in price is largely due to factors beyond the quality of care. Because hospitals offer many different procedures and services, they often have more operational costs and overhead. On the other hand, standalone facilities generally can offer a better price point because their focus is on providing only that imaging service.
Employers should consider partnering with their medical carrier or a third-party vendor to support employee education with cost-transparency tools. Adoption of network services can also be encouraged by creating incentives to use these tools before having a procedure performed. Tools that provide transparency around pricing, quality and claims help employees navigate this process more easily and better utilize their healthcare dollars.
Aon has worked with employers of all sizes to encourage employees to display consumer-driven behaviors, and we can help develop a custom approach based on the unique needs of your organization.
Educate Employees on Their Healthcare Options and Benefits
Educating employees is critical to successfully encouraging them to make consumer-driven healthcare decisions. Fully educating employees on their healthcare and their benefits offerings through in-office training and open enrollment meetings allows benefits managers to help employees understand how their plans work so there are no surprises later.
Employers should provide guidance to their workforce to help them understand their benefits overall, and should explain complex topics, financial responsibilities, and the flexible and portable nature of these accounts.
There are many ways to use technology to help employees access information regardless of their industry, age or employment type. The emerging multi-generational workforce needs to have information at their fingertips, and the easy accessibility of information as it pertains to HSAs, benefit plan details and investment options within these plans make them even more enticing.
Educating employees about how to get an ID card or where to find information about doctors within their network does help them avoid costly mistakes, but you’ll need to continue to provide guidance on the advantages of HDHP accounts to help them to navigate their benefit options.
Consider providing a quarterly communication that touches on preventive care services that are covered 100% by your plan and offering up helpful tips on becoming a better healthcare consumer. Employers should seek to utilize vendors that provide advocacy solutions to support employee questions, or ones that provide assistance with insurance billing issues or guidance with network access.
Some brokers, including Aon, partner with vendors to reduce the employer’s workload and responsibility for managing employee benefit inquiries.
Continuously re-educating employees on the “saving options” for HDHPs is key to the success of these plans and understanding the importance of the tax benefits of an HSA allows employees to maximize the overall benefits of their qualified HDHP (QHDHP). HSAs, which are only available to individuals enrolled in QHDHPs, are an increasingly important part of benefit plans for employees, allowing individuals to put money aside on a pre-tax basis to cover qualified out-of-pocket medical expenses.
These tax benefits mean HSAs have financial benefits beyond just covering near-term healthcare costs. As an employer, aim to educate your employees on the benefits of HSAs, including using them as a tax-protected wealth-accumulation account rather than simply using them to cover healthcare expenses year-to-year.
Although the concept of healthcare consumerism has been around for more than a decade, it still requires consistent education and reinforcement. As multiple generations continue to exist in the workforce, employer guidance will be expected, especially as healthcare costs rise.
Employees will bear more of the cost burden and will look to their employers for guidance on transparency, cost and quality. Employers must drive change with education, tools and advocacy to enable employee empowerment.
Guided by the expertise of an experienced broker and consultant like Aon, an employer can enable consumerism by arming themselves with the technology and resources needed to help employees make informed decisions, and ultimately manage the cost of healthcare.
1Kaiser Family Foundation, Employer Health Benefits Survey, 2018.