How does the lack of transparency impact the success of the strategy? As U.S. health plan premium increases continue to outpace inflation, employers have shifted costs to employees, offering them difficult choices such as:
Fact: When consumers don’t have to pay for the services they use, they won’t care what those services cost.
A critical component to the success of consumer-directed health plans, such as high-deductible plans coupled with employee-owned health savings accounts, is getting employees to think like purchasers. When employees have to pay at least part of the cost of the services they use, they will begin looking for low-cost/high-quality provider options. As a result, their health care costs, and their employer’s costs, will decrease. That, at least, is the theory.
Theory vs. reality
Consumerism experts often bemoan the fact that shopping for health care is not like shopping for cars, appliances and shoes. If someone else is paying the bill, why wouldn’t consumers buy the most expensive car, refrigerator, Manolo Blaniks or knee surgery? Isn’t the most expensive car going to be the “best” car? Isn’t the highest cost health care going to be the best quality health care?
In many markets, the theory of creating smart consumers by increasing out-of-pocket costs has collided with the reality that engaged and frugal consumers often cannot get the comparative cost and quality data that they need to make smart purchasing decisions. That is one reason why buying health care is not like buying a car.
Fact: The complexity of health care/insurance pricing is a mystery to most health care consumers. In network/out of network. Reasonable and customary charges. Billed charges. Contracted pricing. Global pricing. Procedural pricing. All of these technical and overlapping ways of charging users of health care services make comparing costs from one facility to another extremely difficult. Most providers do not see the need to provide straightforward pricing information to their potential patients, your employees.
Fact: Health care costs and quality can differ widely from one provider to another in the same network and same market.
Below is an actual example for a self-funded employer and its employees.
Recommendations
There are, however, steps that employers can take to help their employees benefit from cost and quality data:
Design their health care plans to give employees a financial incentive to choose doctors and hospitals that provide contracted pricing data by procedure. Employees should know what their choices are and what those choices cost.
Let local doctors and hospitals know that their plan favors low-cost/high-quality health care services that have transparent pricing.
Continue to educate employees every month that they have choices within their network and that those choices will impact how much everyone spends on health care.
