For more than a decade, the healthcare industry in the United States has been in the midst of a subtle shift toward consumerism. With more options for where to get care – and more financial responsibility to pay for that care – employers have increased their focus on healthcare consumerism with the goal of helping employees make more informed choices about their healthcare spending and saving.
Hospitals, health systems, insurance companies, startups, and even employers have tried to borrow tried-and-true consumer engagement models from industries like retail, travel, and banking. But these models have achieved limited success when they’re applied to healthcare.
So what exactly is healthcare consumerism, and why has it failed in many ways? Let’s dig into a few definitions and challenges, and talk about how we can fix it.
What is healthcare consumerism?
The Institute for Healthcare Consumerism offers the following healthcare consumerism definition:
“Transforming an employer’s health benefit plan into one that puts economic purchasing power – and decision-making – in the hands of participants.”
What does that look like in practice? It’s different for every company, but tactics can include:
- Educational materials and information about benefits
- Offering financial incentives or rewards to encourage employees to make smart choices (like employer HSA or 401K matches)
- Preventative care discounts (free annual physicals, discounted telemedicine, etc.)
- Increased focus on high-deductible health plans (that put financial responsibility in employees’ hands)
The ultimate goal is for consumers to be more informed about the healthcare decisions they’re making, whether it’s before they enroll in a health plan or before they go to the doctor.
What’s driving consumerism in healthcare?
Three key factors have been driving healthcare consumerism.
Rising healthcare costs
First and foremost is rising healthcare costs. Employers spend $1.2 trillion on healthcare every year. Up to 25% of that total is wasted, according to the Journal of the American Medical Association, whether it’s due to unnecessary treatment, administrative complexity, or a lack of coordination among care providers.
Of employees are doubtful that their medical benefits offer sufficient coverage at the lowest cost
On top of that, healthcare premiums are rising twice as fast as average wages. Simply put, average American workers can’t keep up—and the biggest concern for employees when they choose their benefits isn’t their health, it’s cost. So healthcare consumerism is one attempt to encourage smarter decision-making that contains those costs for employers and employees alike.
The impact of COVID-19 has also profoundly impacted healthcare consumerism. Much of this impact has been negative: Half of employees are worried about their current financial situation, 44% are afraid they may be furloughed or laid off, and 40% are saving less for retirement than they were before the pandemic began. Amid budget cuts and job losses, both employees and their employers face an uphill climb to recovery. But there have been good signs for consumerism as well. Increased use of telehealth, for example, has expanded access to specialty care and has the potential to prevent up to 20% of all emergency room visits.
Lack of employee engagement
The third factor is a lack of employee engagement. Only 52% of employees understand their health benefits, and less than 25% know how a health savings account works.
And when it comes to benefits enrollment, employees aren’t much better off. More than 50% of employees say choosing health benefits is stressful. That’s because they aren’t getting the help they need from their employers—less than 40% of employees receive guidance on their health insurance, and 1 in 5 say they want more benefits education.
As you can see, these trends haven’t all been positive. Even though there’s been a push for healthcare consumerism, it hasn’t helped people make decisions in practice. If anything, financial pressure and hard-to-understand benefits offerings have made it more difficult for employees. That’s the opposite of what proponents of healthcare consumerism want.
How have we gotten healthcare consumerism wrong?
As we mentioned, healthcare consumerism succeeds when people are empowered to make the decisions that best support their personal and financial well-being. Unfortunately, we haven’t actually given employees much help. They’re still not sure where to get the information they need, and they’re still paying an arm and a leg for healthcare (if they can afford to pay at all).
Healthcare consumerism has gained popularity in the insurance industry because it prioritizes the needs of employers and their brokers. All too often, the focus has been finding ways to split the bill with employees – all while the cost of premiums and deductibles rises faster than employees’ income. Whether it’s driving employees to enroll in HDHPs, contribute more to their HSAs, or get preventative care, employers are too often focused on how those actions benefit themselves—through lower claims costs, fewer payroll taxes, and more productive and healthy employees.
To achieve the original goal of healthcare consumerism—employee empowerment—we’re asking employees to become year-round experts on their benefits. That’s a tall order, and it’s simply not something that employees are going to do.
93% of employees default to the same plans every year, and 47% of employees only make changes to their benefits when they have to. Employers need to remember that benefits only matter to employees and their family members when they need them. When they suddenly need glasses and haven’t had to look at vision insurance before. When their child breaks a leg at a soccer tournament out of town and they suddenly need an in-network ER. When they receive a cancer diagnosis and need a treatment that insurance will pay for. Otherwise, benefits don’t mean much more to employees than an insurance card in their wallets.
When employers put their own needs first, they run the risk of giving employees lots of healthcare choices—without actually helping them navigate and understand those choices. They may build a great benefits page on their intranet, chock full of comparison charts and other information that explain health coverage in great detail. But if it’s full of jargon, or if employees aren’t actively seeking out that information (spoiler alert: they’re not), it’s a lot less likely that they’ll make the right decisions when they actually need to think about their healthcare.
How does ALEX address the challenges of healthcare consumerism?
The best strategy to help employees become better, more informed consumers of healthcare? Use an employee-first approach that drives engagement in the moments that matter.
Remember, it’s more than annual open enrollment. When employees log into their HSA, file a healthcare claim, or search for an in-network doctor, they’re actively engaged. They’re looking for ways to make smarter health and financial decisions. They’re open to learning more about their options. They’re embracing healthcare consumerism.
To make the most of these moments, employers need to be ready, willing, and able to proactively drive employees towards the right choice for them. They won’t always come during normal business hours – healthcare questions rarely do – and there won’t always be enough HR pros to handing in-person or email inquiries.
An always-available, scalable technology platform purpose-built to walk employees through important decision-making processes can nudge employees in the right direction any time of day (or night). This leads to cost savings, improved outcomes, better productivity, and peace of mind for employees and their employers.
ALEX drives engagement by getting to know employees and understanding their needs, not only when they’re choosing their benefits but year-round. ALEX can help employees become informed healthcare consumers by supporting their efforts to: